Essay: Russia's economy will enter a long-term decline

“Russia’s economy is entering a long-term regression,” predicted Alexandra Prokopenko, a former Russian Central Bank official who left the country shortly after the invasion. - Wall Street Journal, March 2023

The war in Ukraine and Western sanctions are putting downward pressure on Russia's economy and the biggest effects are going to be the long-term effects.

The flag of Russia

In March of 2023, the Wall Street Journal reported concerning Russia's economy:

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“Despite Russia’s resilience in the short term, the long-term picture is bleak: Moscow will be much more inward-looking and overly dependent on China,” said Maria Shagina, a senior fellow at the International Institute for Strategic Studies think tank in London. A big part of the dimming outlook stems from a bad bet by Mr. Putin last year that he could use Russian energy supplies to limit Western Europe’s support for Ukraine. European governments, instead of tempering their support for Kyiv, moved rapidly to find new sources of natural gas and oil. Most Russian gas flows to Europe stopped, and after an initial jump, global gas prices fell sharply. Moscow now says it will cut its oil production by 5% until June from its previous level. It is selling its oil at a discount to global prices. As a result, the government’s energy revenue fell by nearly half in the first two months of this year compared with last year, while the budget deficit deepened. The fiscal gap hit $34 billion in those first two months, the equivalent of more than 1.5% of the country’s total economic output. That is forcing Moscow to dip deeper into its sovereign-wealth fund, one of its main anti-crisis buffers.

”

An excellent video related to the above article is: Russian Economy Starts to Collapse as Current Account Falls 85% & Oil & Gas Revenues fall in 2023

Recently, the historian Stephen Kotkin, Research Fellow Michael S. Bernstam, and Sergei Guriev, provost and professor of economics at the Institut d'études politiques de Paris had a discussion related to the sanctions on Russia and the damage caused by the war in Ukraine to Russia which is given below.

Here is that discussion: Sanctions and Russia: Effects, Lessons, and the Future | A History Lab Discussion w/ Stephen Kotkin, August 25, 2023

Key point: The war in Ukraine and Western sanctions are putting downward pressure on Russia's economy and the biggest effects are going to be the long-term effects.

For more information, please see:

• The war in Ukraine and Western sanctions will significantly hurt the Russian economy

• Why I am not bullish on Russia's future

Putin’s Unsustainable Spending Spree. How the War in Ukraine Will Overheat the Russian Economy

As noted above, Alexandra Prokopenko is a former Russian Central Bank official who left the country shortly after the invasion. Below is a 2024 article of by Alexandra Prokopenko.

• Putin’s Unsustainable Spending Spree. How the War in Ukraine Will Overheat the Russian Economy by Alexandra Prokopenko, January 8, 2024

Russian oil: Lower future production/profits due to future higher extraction costs and other inefficiencies

See also: Russian oil: Lower future production/profits due to future higher extraction costs and other inefficiencies

Map of Russia.

Approximately 7% of Russia's land is arable and suitable for agricultural production.

In 2023, OilPrice.com reported in an article entitled Analysts Predict 42% Decline In Russian Oil Production By 2035:

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But Moscow cannot continue defying the odds indefinitely. BP Plc (NYSE: BP) has predicted that the country’s output is likely to take a big hit over the long-term, with production declining 25%-42% by 2035. BP says that Russia's oil output could decrease from 12 million barrels per day in 2019 to 7-9 million bpd in 2035 thanks to the curtailment of new promising projects, limited access to foreign technologies as well as a high rate of reduction in existing operating assets. In contrast, BP says that OPEC will become even more dominant as the years roll on, with the cartel’s share in global production increasing to 45%-65% by 2050 from just over 30% currently. Bad news for the bulls: BP remains bearish about the long-term prospects for oil, saying demand for oil is likely to plateau over the next 10 years and then decline to 70-80 million bpd by 2050. That said, Russia might still be able to avoid a sharp decline in production because many of the assets of oil companies that exited the country were abandoned or sold to local management teams who retained critical expertise.

”

Stratfor, an American strategic intelligence publishing company, reported in their 2020 article The Golden Age of Russian Oil Nears an End:

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In the next 10-20 years, Russian oil will become more expensive as extraction from less accessible basins becomes necessary to maintain current export levels. Internal inefficiencies within Russia's oil sector, as well as the remote locations of remaining reserves and potential shifts in future oil demand, add up to a murky future for the country's energy-reliant economy. Moscow may adjust its budget to ensure plummeting oil prices don't cut into its government spending, but proper economic diversification away from energy remains a complex and unlikely process.

”

2023: In Russia, the shortage of personnel in the oil and gas industry was assessed

Russian demography has long been an existential issue to Vladimir Putin. In 2021, he declared “saving the people of Russia is our top national priority".

See: Russia is dying out. The war in Ukraine is making Russia's demographic crisis even worse

See also: Low labor productivity is one of the most acute and important problems facing Russia and Russia is dying out. The war in Ukraine is making Russia's demographic crisis even worse

The Oreanda-News agency was founded in August 1994 in Moscow, becoming one of the first independent news agencies in contemporary Russia. Since 2007, it has been based in Saint Petersburg, Russia.

In 2023, Oreana-News reported in an article entitled In Russia, the shortage of personnel in the oil and gas industry was assessed:

“

Currently, the Russian oil and gas industry lacks 25 thousand employees. Elena Kuznetsova, partner of Yakov and Partners, told RIA Novosti about the shortage of staff. She noted that the need for personnel in the sphere is 90 percent higher than at the beginning of 2021. Companies are particularly in need of welders, locksmiths, machinists, engineers and drillers. Moreover, problems with the lack of workers are fixed not only in the energy sector. In particular, companies are actively looking for sales specialists, IT specialists, builders and managers. Kuznetsova emphasizes that it is most difficult for employers to find medium- and highly qualified personnel, since they cannot be replaced quickly. Experts attribute the shortage of labor to the relocation of specialists, the low attractiveness of work in remote regions, as well as the aging of existing personnel and low motivation of young people. Earlier, the head of the Central Bank, Elvira Nabiullina, said that the shortage of personnel is the main problem of the Russian economy. According to the representative of the Bank of Russia, for further economic growth, it is necessary to ensure not the availability of money and loans, but to increase labor productivity.

”

During his annual phone-in with the public in June this year, President Vladimir Putin described low productivity as “one of the most acute and important” problems facing Russia. See: Low labor productivity is one of the most acute and important problems facing Russia

For more information, please see:

• Russia is dying out. The war in Ukraine is making Russia's demographic crisis even worse

User: Conservative's international politics essays

General

• The myth of multipolarity. What do the terms unipolar, bipolar and multipolar mean as far as international relations?
• What drives Xi Jinping and Vladimir Putin?
• The anti-Christianity Mao Zedong, Fidel Castro, Joseph Stalin and Xi Jinping have opposed homosexuality so this isn't a very high moral bar for China and Russia to clear

The United States

• The United States will be the leading power in the world for the foreseeable future
• Is the USA an economic powerhouse and juggernaut?

China

• Skepticism about China remaining a global power

• The rising rule of communist idiocracy in China

Russia

Vladimir Putin

See also: Vladimir Putin is a corrupt kleptocrat and an authoritarian

• Why I am not bullish on Russia's future

• Vladimir Putin is a corrupt kleptocrat and an authoritarian

• Russia is dying out. The war in Ukraine is making Russia's demographic crisis even worse

• Vladimir Putin's foolish decision to launch an invasion of Ukraine in February 2022

• Russian war crimes in Ukraine

• Russian oil: Lower future production/profits due to future higher extraction costs and other inefficiencies

• Russia's economy and gas and oil profits will be BADLY damaged when China's economy declines

• China's economic decline will contribute to Russia's decline

• Russia's neo-Nazi problem belies one of Putin's rationales for the war in Ukraine

• Russia has the 2nd highest rate of alcoholism in the world

• Low labor productivity is one of the most acute and important problems facing Russia

• The future of Russia. The kings of wishful thinking versus a more realistic scenario

• Russia getting pummeled in wars in Russian history that hyper Russophiles will not tell you about

• The war in Ukraine and Western sanctions will significantly hurt the Russian economy

• Are the Russians as unhappy as they claim they are?

• Russia has the 3rd highest rate of divorce in the world

• Is Vladimir Putin a beacon of family values or a complete failure in this matter?

• Is Vladimir Putin a manchild or a macho genius?

• Search results for "Russia demographics crisis" using the Russian search engine Yandex and Google Scholar. Fanatical Russophiles weep for Mother Russia who has a low fertility rate that is far below a replacement level of births

• Do you strongly believe in gun rights? Don't move to Russia!

• Nordsteam pipelines being sabotaged and Putin failing to play politics several moves ahead on the politics chess board

• Doomsday phobias - including nucleomituphobia caused by Russian threats to use a nuclear bomb

• Essay: Russian Statistics Service indicates that 22.6 percent of Russian households aren't connected to a sewer system

War in Ukraine

• How long will the war in Ukraine last and what will its likely outcomes will be? A prediction on its outcomes

• The SPECIFIC MONTH OF APRIL 2022 was not a pivotal point in politics that will affect politics for 30 years (A Minor dispute with a Conservapedian about the war in Ukraine)

Give me liberty, or give me death!

• What drives Xi Jinping and Vladimir Putin?

• The rising rule of communist idiocracy in China

• Vladimir Putin is a corrupt kleptocrat and an authoritarian

• Do you strongly believe in gun rights? Don't move to Russia!

"Give me liberty, or give me death!" - Patrick Henry

User:Conservative's essays

• User:Conservative's essays

External links

• Vladimir Putin says that inflation in Russia is making it 'practically impossible' for businesses to plan, Business Insider, 2023