Russia made a large deal of money on exports, but money was leaking from the economy. Sanctions and economical war against the West caused these measures to return to the country. present they power and fuel the Russian economy.
There is simply a phenomenon of fast economical development, which is the subject of a commercial and financial war, subject to global restrictions, sanctioned by the richest countries of the world. In the first 4th Russian economics grew by 5.4% and in the second 4th by 4.0 percent. This is simply a rate comparable to China (an increase of 5.0% and 4.7%). It is hard to compare them with the stagnation of the European Union economy, which has moved only 0.3% in the first 2 quarters.
I have described the mechanisms of this phenomenon in erstwhile articles ("Commercial War Mobilizes Russian Economy" https://myślpolska.info/2024/06/29/war-trade-mobilises-Russian-economy/ and “Russia, export weakness and power” https://myślpolska.info/2024/07/27/Russia-export-slabeus-i-potega/). We know that Russian economics is fueling a unchangeable influx of export money, especially oil. However, you can export and have nothing of it, as in the case of Poland, where we make gross from export of goods and services, but profits flow abroad to the office of Western companies.
In our east neighbour this phenomenon was much sharper. The gross from the extraction of natural materials leaked from Russia like from an old barrel. Legal and illegal capital "otok" (capital drain) are symbolic suitcases of dollars, and massive transfers through suspicious trading operations and banks.
The Kremlin has worked for years to master this phenomenon ("Russian oil – collapse and reconstruction of power" https://myslpolska.info/2021/09/10/Russian-ropa-fall-i-reconstruction-potegi/) and erstwhile in 2022 the West plundered both state and private Russian money – economical elites (called by western competitors "oligarchs") took refuge with assets under the wing of their own state, as only it guaranteed their defence.
As a result, the final consequence of the Russian economy (expressed under the heading ‘current account’, including financial flows), improves importantly more than the trade balance. For the first 4 months 2024 it was $31.7 billion erstwhile it was twice as low a year ago. Russia so has an expanding amount of resources available to make the economy.
Therefore, despite very advanced interest rates (18% erstwhile in Poland 5.75%), companies do not have problems with the availability of capital, their debt portfolio is increasing rapidly. In 2020 – legal persons took 336 billion rubles of fresh loans, 2021 – 460 billion, 2022 – 604 billion, in 2023 – as much as 1022 billion. This year, even faster – in 7 months, as many as 1050 billion rubles of loans arrived, which is more than in the full last year and 3 times more than in 2020. The Russian economy is recovering many years of very mediocre external funding. Today, powerful means are poured into it.
If you compare this to Poland, we have the opposite. After years of boom, external financing is weakening, the corporate debt portfolio is shrinking. Comparing our economies – in Russia the portfolio of corporate loans is PLN 3.5 trillion (80.7 trillion rubles), with us – 420 billion. According to GDP or population, the Russian economy present is much more (2.5 times GDP and 3.5 times per capita) saturated with debt production capital (note: we are not talking about consumer credit).
However, it is worth remembering that as with exports (https://myślpolska.info/2024/07/27/Russia-export-slabeus-i-potega/) Russia's capital resources are nothing but the power of Western finance. No Russian bank is located in the global top 20, and there are 10 Chinese and 5 US banks. The capitalization of the Russian stock exchange is an unnoticeable fraction of the global capital accumulated in public shares of Western stock exchanges. These tens of tycoons, called "oligarch" by competitors or large state resources, are not Western-scale capital that has accumulated wealth for many centuries.
However, the Russian State invests what it has, and has more and more, in the improvement of a sovereign economy, especially industry. And he's doing beautiful well.
Andrzej Szczęsniak
Think Poland, No. 37-38 (8-15.09.2024)
