War Problems – Russia’s Struggling Economy
Russia has done a decent job with keeping their economy afloat during the war, but the energy money is no longer there. Exports have fallen dramatically as other sources have stepped in, with the United States becoming the largest supplier of crude oil to Europe now which shows how they have lost Europe as a customer for the near future. The problems plaguing Russia’s economy are starting to show themselves, and it plays out to some interesting scenarios.
Currently, Russia is facing a massive labor shortage for a variety of reasons, the first one directly related to the war as workers from other sectors are being called to the front lines to fight. Brain drain has also occurred on a wide scale as intellectuals have quickly fled the country, leaving the economy with little workers to sustain and grow the economy. A byproduct of this has been decreased foreign investment in the country, which analysts say will cause a long-term decline in the Russian economy.
Even though it is possible that Ukrainian resistance will get weaker and weaker as reports show, Russia has made irreparable damages to its economy as many bridges have been burnt with foreign countries. Because of this, it is very possible that Russia becomes the economic puppet of China as they continue to increase their reliance on them, and this is only one of China’s many moves. The country made a trade agreement with Brazil to trade in only reals and yuans, removing the US dollar from the equation, and it is similar to a deal they have with Russia. Increased Chinese influence on the Russian economy can play a major role in geopolitics moving forwards, making this a situation that needs to be monitored as the war continues.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.