The Russian aggression in Ukraine has entered day 40 but there seems to be no major breakthrough in sight. While Ukraine is on the receiving end as Russia continues to target key cities and strategic ports, Russia on the other end is suffering deep gashes of Western sanctions on its economy.
Russian entrepreneurs are the ultimate casualties. Some major brands have already wound operations in Russia while oligarchs in other nations have been sanctioned by the ruling government.
Russian entrepreneurs facing worst crisis ever:
Kirill Kukkoyev is among the worst sufferers. His business of renovating high-end apartments met with near end as Swedish furniture major Ikea announced withdrawal from the Russian market. That night he worked till midnight to seal in maximum orders. The following day, his company was born again as “Idea.” Despite the saving move, clients have been cancelling orders. Nearly 75 percent of the contracts have been annulled citing economic meltdown.
Kirill is not alone. Stand-alone businesses such beauty salons and spas, transport and logistics companies, restaurants and bars have all been hit adversely by Putin’s offensive on Ukraine.
Russian economy on the decline:
Giant players such as McDonald’s, Starbucks, Coca-Cola, PepsiCo, General Electronics, and many more have shut their operations in Russia. These sanctions in turn have choked the Russian economy as wages are on the decline. Inflation is currently at a record 24 percent, consumption has fallen and the supply chain is worst affected. Additionally, about 80 types of medicines, including painkillers and insulin, are in short supply. Panic buying of staple goods has resulted in Russian authorities ordering an anti-monopoly probe. The price of sugar rose by around 37 percent as a result of panic buying.
Russian economists predict that in the coming months, major manufacturers will run out of key components for their products. Many goods will suffer because of lack of spare parts. If manufacturers go for local components, the quality of products will go down drastically with high input costs resulting in inflated rates of products. However some opine that with the rising crude prices, Russia will be able to fund closer to its interests.
Economy just better than North Korea:
Economists are fearing a prolonged war in which case, Russian economy will go down the North Korea route. Sanctions, cut-off, insular and inflation are some of the problems seen ahead.
Other problems faced by entrepreneurs:
A lack of fish, vegetables, pasta, salads, sauces, and other key items has been hindering the restaurant industry, said Sergei Mironov, vice president of the Federation of Restaurateurs and Hoteliers. Newly opened bars in Moscow will not be able to sustain as imports have stopped.