- Sanctions against Russia will hit technology products, former finance official Oleg Vyugin told Reuters.
- Russia’s technology industry depends on imports, so it needs to recreate those products domestically.
- If the situation does not improve, Russia’s technological development will decline, Vyugin said.
Russia may face years of decline in technology development due to widespread sanctions over the Ukraine war, said Oleg Vyugin, a former high-level finance ministry and central bank official. Reuters In an interview on Tuesday.
This is because when it comes to technology, Russia relies on imports and suffers from import embargoes and boycotts. Consequently, the country has to develop its own products as substitutes for their imports.
“The world will move forward, but Russia will only use some second-class technology and spend huge resources to recreate what the world already has, but cannot import,” said Vyugin, who was a deputy finance minister and deputy. Governor of the Bank of Russia. He retired from the Moscow exchange this year.
Vyugin told Reuters “sanctions work” as Russia’s economic growth has been negatively affected.
Vyugin’s comments stand in contrast to President Vladimir Putin’s positive assessment of the economy. In early September, Putin said the country’s economy was coping with Western sanctions. About seven months into the war, Economy of Russia Do not continue to appear resilient. The energy giant’s economy has been bolstered by energy exports on the back of higher prices, which had been growing even before the war.
But imports into Russia have shrunk drastically, which shows a Record high current account surplus $70.1 billion for the second half of 2022. The current account surplus is a key measure of trade and investment flows, and is a large component of the trade measure.
Russia has tried to counter the ban by replacing imports with non-recognizing countries or with homegrown alternatives. But success has been limited, analysts say Bruegel, A Brussels-based think tank, wrote in late March.
“High-tech products are made using inputs from many countries, but few of them can function without inputs from the European Union or the United States,” the analysts wrote. “As a result, a single economy cannot replicate the power of a global network.”
Semiconductor chips, aviation parts and medical supplies are among the heavily affected imports, Bruegel analysts noted.
Russian state-owned carrier Aeroflot has already begun stripping spare parts from operating planes due to sanctions-induced supply shortages. Reuters Reported in August.
“If the situation does not change, Russia will see a gradual decline in the level of technological development,” said Vyugin.