Facing Sanctions from Western Countries, Russia's Economy is Threatened with Collapse

Western countries will impose sanctions on Russia following its invasion of Ukraine on February 24, 2022. These sanctions could severely impact the economy of the "Bear Nation."

Russia is a major exporter of energy and other commodities to the European Union and other countries. Therefore, economic sanctions could significantly disrupt its economy.

On the first day of the war, the Moscow Exchange saw its stock prices plummet by more than 50%. Similarly, the Russian ruble depreciated by more than 10% against the US dollar.

According to World Bank data, Russia's economy grew by 4.3% in the third quarter of 2021 compared to the third quarter of 2020 (Year on Year/YoY). However, throughout 2020, the economy of the country led by President Vladimir Putin contracted by 2.95% due to the COVID-19 pandemic.

In 2020, Russia's economy reached US$1.48 trillion, or approximately Rp 20.92 quadrillion (at an exchange rate of Rp 14,105 per US$). This placed Russia as the 11th largest economy in the world in 2020.

Following the collapse of the Soviet Union in 1991, the Russian economy experienced prolonged contraction until 1998, as shown in the graph. The country, formerly part of the Soviet Union, even experienced a contraction as deep as 14.53% in 1992.

Between 2000 and 2020, Russia's Gross Domestic Product (GDP) contracted three times. The deepest contraction occurred in 2009, with negative economic growth reaching 7.8%.