HOUR Russia faces a long-term risk of “economic oblivion” due to international sanctions and the withdrawal of businesses from the country, some economists say, despite current signs that the Russian economy is coping with Western sanctions. Last week, the IMF revised down its forecasts for Russia’s GDP by 2.5 percentage points, causing the Russian economy to contract by an estimated 6% this year. The fund said the Russian economy appeared to be coping better than expected with the burden of sanctions.

And Russia’s central bank surprised the markets by cutting its key interest rate to 8% in July, below the pre-Russian invasion of Ukraine. At the same time, the ruble bounced back from historic losses it recorded as a result of Russia’s invasion of Ukraine.

At the same time, Russia continued to export energy and other goods, also taking advantage of Europe’s dependence on Russian gas supplies. On the other hand, some economists predict that the cost to the Russian economy of the exit of foreign companies will be long-term, which will affect its productive dynamics and lead to a brain drain. To this will be added the losses it will record in the long term in the oil and natural gas market, as well as its limited access to important imported technological products. Ian Bremer, president of the Eurasia Group, pointed out to CNBC last Monday that while the short-term disruption from the sanctions imposed on Russia is less than expected, the real debate on the matter goes beyond 2022.

Eurasia Group predicts a steady and long-term decline in economic activity, with Russia’s GDP shrinking by 30-50% compared to Ukraine’s pre-war levels. Mr. Bremer notes that as sanctions tighten and discontent grows, highly educated Russians will leave Russia. This shows the importance of trade sanctions on sensitive technologies and “a longer period of time during which sanctions will undermine the progress of production and development.”

A Yale study published a month ago notes that international sanctions, as well as the exit of more than 1,000 multinational companies, “catastrophically paralyze the Russian economy.” “Despite Putin’s illusions of economic self-sufficiency and import substitution, Russian production has stalled and there is no production capacity to replace the lost businesses, products and talents,” the related studies say, among other things.