Putin ‘Destroyed’ Russian Economy Save For Oil, White House Says

The top line

Russian President Vladimir Putin has sunk his country’s economy off its still-earning oil exports, a Biden administration official said Monday, as Russia withdraws from the global economy amid its invasion of Ukraine.

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Key Data

“All he has is oil, so that’s what’s funding this war,” Amos Hochstein, an adviser to President Joe Biden, told CNBC.

“Putin has destroyed the rest of the economy,” Hochstein added.

Russia’s gross domestic product will shrink by 3.4% this year, according to the International Monetary Fund, which is much worse than the GDP growth expected in 2022 for other global powers (1.6%), China (3.2%), United States (3.2%). Kingdom (3.6%) and Japan (1.7%).

Much of Russia’s decline comes from the impact of sanctions by the US, the European Union and their allies, which have halted almost all exports to rival countries, but Russia’s oil business continues to grow for the gas-rich country: Russia’s energy export revenue is set to grow by 38%. this year it has risen to nearly $340 billion, according to Kremlin documents seen by Reuters in August, thanks to rising crude oil prices and eager buyers in China and India.

Key background

After Russia invaded Ukraine on February 24, energy prices soared, affecting the world’s second largest oil exporter and by far Europe’s largest supplier of oil and natural gas. Uncertainty grew as to what the coming West’s response would mean regarding the level markets. International benchmark Brent crude was at $92.51 a barrel on Monday, up 12% from a year ago, while US gas prices rose 11%. Rising energy prices pushed inflation in the US and Europe to levels not seen in more than 40 years, and put the global economy on the brink of recession.

Big Number

20% Accordingly, how much Russian exports have decreased since the beginning of the invasion New York Times.

the tangent

The war has also pushed up global food prices, as Russia has prevented ships carrying grain from leaving the ports of Ukraine, one of the world’s biggest agricultural producers. Over the weekend, Russia backtracked on a long-awaited agreement to continue exports, and wheat prices rose more than 5% on Monday.

Further reading

How Russia Pays for War (New York Times)

Has the global food crisis erupted? Russia to pull out of grain deal over Ukraine drone attack (Forbes)

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