The Russian economy may face a much deeper recession than official government forecasts, Bloomberg writes, citing a copy of a confidential report for the Russian leadership..

Officials and experts who prepared the report are trying to assess the impact of Russia's economic isolation due to President Vladimir Putin's invasion of Ukraine.

The decline is forecast to deepen as pressure from European and US sanctions intensifies. The industries that have been filling the budget of the Russian Federation for years will suffer the most.

Two out of three scenarios show that the fall will accelerate next year. The " And “stressful” - by 11.9% in 2024 compared to 2021.

All scenarios provide for increased sanctions and the possibility of new states joining them. And Europe's abrupt withdrawal from Russian oil and gas could hurt the Kremlin's ability to secure its own market, the report says..

In addition to the sanctions that hit about a quarter of Russian imports and exports, the report details how the Russian Federation is facing a “blockade” affecting “virtually all modes of transport”, which deepens the isolation of the economy.

Technological and financial constraints intensify pressure on the economy. According to the authors of the report, up to 200,000 IT specialists may leave the country by 2025, and this is the first official forecast of a growing “brain drain”.

Fall in exports.

In the next year or two, Russia is expected to reduce production in a number of export-oriented industries, the report says.. We are talking about oil, gas, metals, chemicals, wood. Although some growth is possible in the future, “these sectors will never again become the drivers of the economy.

A complete cessation of gas supplies to Europe, which is the main export market of the Russian Federation, may cost the aggressor $6.6 billion a year (up to 400 billion rubles) in the form of lost tax revenues. It will not be possible to fully compensate for losses due to new export markets even in the medium term.

Impact on the oil sector.

As a result, Russia will have to cut hydrocarbon production, which will jeopardize the Kremlin's goal of expanding gas supplies to the domestic market, the report says.. Lack of technology needed to build liquefied natural gas plants is 'critical'.

Europe's plans to stop importing Russian oil products (last year about 55% of exports went to the European market) may provoke a sharp reduction in production, and the domestic market will also face a shortage of fuel.

Metal producers will lose $5.7 billion a year due to sanctions.

If the world economy plunges into recession, Russia will face a further reduction in exports, and the demand for its products will be the first to disappear.. This can cause a sharp fall in the ruble exchange rate and a jump in inflation..

As for imports, the main short-term risk is the suspension of production due to the lack of imported raw materials and components.. In the long term, the impossibility of repairing imported equipment may permanently limit the economic growth of the Russian Federation.

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Critical Import.

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Even in the agricultural sector, dependence on external factors could force Russians to reduce food consumption as supplies shrink.

Restrictions on access to Western technology could set Russia back a generation or two from modern standards, as it will be forced to rely on less advanced alternatives from China and Southeast Asia..

The full impact of sanctions is visible in the sectoral context:.

Agriculture: 99% of poultry production and 30% of dairy cattle production depend on imports. Seeds of major crops such as sugar beets and potatoes, fish feed and amino acids are mainly imported from abroad..

Aviation: Foreign-made aircraft account for 95% of passenger traffic, and lack of access to imported parts could lead to fleet reductions as they retire from service.

Mechanical engineering: only 30% of machine tools in Russia are domestically produced, local industry is unable to meet growing demand.

Pharmaceuticals: about 80% of Russian production depends on imported raw materials.

Transport: EU sanctions triple the cost of road transport.

Communications and IT: by 2025 Russia may face a shortage of SIM cards, by 2022 the telecommunications sector of the Russian Federation will lag behind the world leaders by five years.

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The economy of the Russian Federation began to stagger. The collapse is still very far away, but, in any case, it becomes obvious that the consequences of the sanctions pressure this time can really harm Russia. Soon Russia will fully feel how much this war is costing her.. Read more about the budget deficit and other problems of Russians in the article by Yulia Samaeva “The Russian economy has finally shaken”.