Vladimir Putin Acknowledges the Impact of Sanctions on Economy

Russian President Vladimir Putin has acknowledged the impact of the western sanctions on the country’s economy for the invasion of Ukraine. Vladimir Putin said in a televised remark, “Our economy will need deep structural changes in these new realities and I will not hide this, they will not be easy, they will lead to a temporary rise in inflation and unemployment.”

The effects of sanctions have spread throughout Russia, leading to factory closures, unemployment, doubling interest rates and a fall in the value of the ruble. Inflation is above the central bank's target. Russia is on the verge of default.

Referring to an exodus of Western companies from Russia in recent weeks, Mr Putin held out an olive branch to those multinational companies still doing business in his country.

In his speech Wednesday, Putin blew up one of the major Western financial weapons against Russia: the freeze on the assets of the Russian Central Bank held in North America and Europe. It prevented Moscow from spending much of its $630 billion reserves to support the ruble.

The Central Bank of Russia will meet on Friday to discuss possible interest rate changes. At the last meeting on February 28 and the central bank raised interest rates to more than 20% to make the ruble's holdings more attractive and to mitigate the expected decline.

Putin has promised to take steps to ease the pain of sanctions on Russians, including increased payments to pensioners and civil servants, higher minimum wages, and financial support for businesses. After Western sanctions caused a sharp devaluation of the ruble, the purchasing power of ordinary Russians was severely impaired.