Today Rossat, the Russian Federation’s official statistics service reported that corporate profits in Russia rose for the fifth month to 11.8 billion rubles. Although the Russian economy continues to expand, it remains, at least in terms of corporate profits, at less than half the level of this time last year. And within that simple fact lies a story of immense importance, one that spans the entire globe.
Last year, as you know Russia began, what they called a Special Military Operation in Ukraine. In retaliation the European Union imposed “massive and unprecedented sanctions against Russia.” And they’re right, no nation in history has had such a mountain of sanctions. To date the EU has frozen 21.5 billion Euros of Russian Corporate Assets, 300 billion Euros of Russian Central Bank Assets, and prohibited over 100 billion in Russian Trade.
The impact to Russian Corporate Profits was sharp and dramatic. From December 2022 to January 2023, when the sanctions first began Corporate Profits dropped from nearly 26 billion to less than one-tenth that level (2.3 billion Rubles.) That’s how critical trade with Europe was for the Russian Economy.
However, since January the story has become the remarkable effort by Russia to rebuild foreign markets, replacing their European trading partners, with principally BRICS Nations. Trade with India, China, and Brazil have expanded dramatically in less than a year.
It’s a story that is still being written, but Russia’s ability to stave off the EU Sanctions has made great strides so far.