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Putin’s fear of „overheating” and inflation

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Putin’s fear of „overheating” and inflation
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The Russian economy is weak under the current circumstances. Clearly, Putin must think again if he wants to save the economy, because time is running out.

MOSCOW – The West is gradually turning away from Kremlin President Vladimir Putin. Now fears about the negative consequences that the Russian economy may suffer are so present that more and more Russian business representatives are appealing to Putin. The war in Ukraine and sanctions have greatly weakened the Russian economy, and Putin appears to be running out of resources to avoid the worst-case scenario.

The Russian economy is in crisis – high inflation is putting Putin under pressure

Recently, there have been increasing warnings of signs of „overheating” of the Russian economy. Hermann Greif became particularly clear, Chairman of the Board of Directors of Sberbank, the largest financial institution in Russia. Gref told the state news agency that the Russian economy is „very overheated.” Tass.ru on June 4, 2024. It is simply “impossible” to exceed this production capacity and produce more.

The Russian economy is increasingly suffering from sanctions and the war in Ukraine. © Yuri Kochetkov/DPA

In December 2023, the head of the Central Bank, Elvira Nabiullina, had already expressed concern: “The economy is growing so fast because it is exhausting almost all available resources. Stubbornly high inflation is evidence that the economy has deviated from its potential and lacks the capacity to meet growing demand.” In fact, inflation remains a major problem in the Russian economy.

Inflation remains a major problem for the Russian economy

As the Russian statistics agency Rosstat announced on Friday (June 14, 2024), the inflation rate in May reached 8.3 percent on an annual basis. It is the highest value since February 2023. This was higher than the value of 7.8 percent at the end of April and well above the country’s official inflation target of 4.0 percent. The rapid rise in prices put pressure on the Russian Central Bank to continue raising interest rates to control inflation.

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It also remains to be seen what impact the latest US sanctions will have on Russia’s financial sector. On Wednesday (June 12, 2024), the United States imposed new sanctions on supporters of Russia’s war of aggression, including against Chinese companies. According to the US government, the punitive measures target more than 300 people and institutions that enabled Russia to continue the war – including the stock exchange in Moscow. The Moscow Stock Exchange announced that it would stop trading in dollars and euros in response. This step would push the Russian economy into further isolation.

Sanctions imposed on the Russian economy lead to a slowdown in growth

Penalties and The Ukraine war forced Putin to shift to a war economy, which now retaliates and also slows growth. The domestic economy proved resilient – ​​but according to the World Bank, this was due to the intensification of the war economy, subsidies and private demand, which was stronger than expected. Experts have long warned that the war economy will not be sustainable in the long term.

The World Bank expects economic growth of 2.9 percent for 2024 (January: 1.3 percent), and 1.4 percent (January: 0.9 percent) for next year. Military production continues to have positive effects, but private demand is likely to decline. In April 2024, the International Monetary Fund expected economic growth of 3.2 percent for next year, based on new economic data. The era of the „growth miracle” appears to be coming to an end. (Buhi with materials from the German Press Agency and Agence France-Presse)

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Western sanctions are hitting the Russian economy hard

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Western sanctions are hitting the Russian economy hard
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The West tightens sanctions on the Russian economy. Central sources of income are at risk of extinction. How long will Putin last?

MOSCOW – It seemed paradoxical: Russia’s economy is clearly thriving – despite sanctions, because Russian President Vladimir Putin appears to have used successful evasion tactics. However, a closer look shows that the more time passes, the more difficult the situation becomes for Putin. The economic improvement brought about by the war will only last for a short time, while the sanctions imposed by the West become more effective and specifically attack the weaknesses of the Russian economy.

Sanctions have hit the Russian economy, and liquefied natural gas has come into focus for the first time

The most recent example shows how the West does it Sanctions against the Russian economy Expanding more and more. The European Union has imposed measures against Russia affecting Russian liquefied natural gas for the first time. This does not mean a ban on importing Russian liquefied natural gas, but its transfer from one ship to another within the European Union is prohibited. The result: Russian cargo ships have to make detours to transport LNG, which lengthens delivery times and could limit export volumes. As Svetlana Ikonnikova, professor of resource economics at the Technical University of Munich, explained in an interview with IBN.media

Putin is facing the consequences of sanctions imposed on the Russian economy. © Dmitry Lovetsky/Pool/DPA

If Russia is able to ship less and slower volumes of LNG due to LNG sanctions, that could also have an impact on profits in its LNG business. Economist Alexandra Prokopenko said in an interview with The Sun newspaper, “The European Union and the United States are learning how to impose sanctions and, above all, how to apply them.” tv n. Prokopenko was a former advisor to the Russian Central Bank. The fourteenth sanctions package is not a magic solution “But it is definitely tightening the screws,” Prokopenko said, referring to the gas company Novatek, which leads Russian liquefied natural gas projects.

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Sanctions reduce revenues for the Russian economy

Sanctions could then lead to Putin losing important sources of income in the long term. Russian energy giant Gazprom had already admitted huge losses in May 2024 due to a sharp decline in export volumes. In 2021, Gazprom exported more than 174 billion cubic meters of natural gas to European countries. But in 2023, Gazprom’s shipments of natural gas to Europe amounted to only 28.3 billion cubic meters, according to the news agency’s calculations. Reuters Offer (as of January 2024).

Oil sector profits also decreased due to Western sanctions. Until now, Putin has been using his shadow fleets to circumvent the oil embargo. The European Union can now impose sanctions on the fictitious fleet Sovcomflot in order to limit Russia’s financial options in the Ukraine war, a document showed. It was in the beginning Bloomberg Received on Tuesday (June 11, 2024) and referred to the document. This would eliminate another opportunity for Putin to finance the war.

The sanctions restrict the sources of financing for the Russian economy

The West has also long been trying to use the SWIFT system as a means of putting pressure on the Russian economy. The Society for Worldwide Interbank Financial Telecommunications (SWIFT) system is used by more than 11,000 banks and financial institutions in more than 200 countries and is therefore important for global money flow. The USA and the European Union excluded important Russian banks from the payment system as a punitive measure after the outbreak of the Ukrainian war.

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Banks excluded from Swift cannot receive foreign currency (since a foreign currency transfer between two banks is generally treated as a foreign transfer involving a foreign intermediary bank) or transfer assets abroad. While it would be possible to process international transactions without SWIFT, this process would be expensive, complex and require mutual trust between financial institutions.

Sanctions against the Russian economy: consumption is booming

The consequences of sanctions have also become more apparent among the Russian people. Inflation remains a persistent problem, forcing the Russian central bank to keep key interest rates at 16 percent. „If you have a healthy and growing economy, you don’t need a double-digit key interest rate,” Prokopenko said in an interview with the magazine. Mirror. Despite high inflation, consumption among the Russian population is booming – also because wages are clearly rising. “Russians are consuming as if it were their last day on Earth,” Prokopenko told reporters. tv n. (Buhi)

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Civil war in France? A security expert sees a real danger

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Civil war in France?  A security expert sees a real danger

Is France facing civil war? President Emmanuel Macron is claiming no less just a week before the first round of parliamentary elections. Both the National Rally (RN) and the left-wing party La France insoumise (LFI) will lead to chaos, Macron said Monday on the „Generation Do It Yourself” radio program. He warned against „the political programs of both parties.”

On the one hand, the National Front divides society on security issues by assigning people either religion or origin. On the other hand, the “Proud France” movement spreads “a form of sectarianism.” Macron said both lead to “civil war.”

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Macron is facing criticism from his camp

The head of state’s statements were criticized from both the left and the right. Outgoing National Rally Party MP Edwige Diaz criticized the “irresponsible statements”: “Emmanuel Macron is ready to say any nonsense, spread fake news, and try to save what he can from his camp. His comments show how nervous he is and that he is losing his balance.”

Jean-Luc Mélenchon of La France insoumise accused Macron of „always there to incite.” Communist Ian Brusatte accused the president of being the one who has been causing chaos in the country for seven years: “I remind you that the yellow vests appeared in the first five years of Emmanuel Macron’s term in office. Today we have a country in ruins, with growing inequality. “This is the result of Emmanuel Macron’s policies.”

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Even within his camp, Macron faces criticism. A former Macron minister, who requested to remain anonymous, told the press: “It is unbearable.” „I don’t understand him anymore.” As one outgoing member of the ruling party complained: “Macron is exaggerating, and we are losing our political compass.”

Security expert: „Anything is possible in France”

It looks completely different Well-known security expert Alan Power. He told RMC on Tuesday that there was “in fact a risk of civil war.” There was an enormous amount of anger building up in France, which had “intensified over the past thirty years due to the estrangement between the people and the politicians.”

In two weeks, exactly a year after the unrest following the death of teenager Nahil, violent clashes are expected to occur again – especially if the National Front wins the election. “There have been unrest in France for a thousand years. But right now it is escalating, there are more and more riots on TikTok. They start very quickly and stop quickly. You go from rioting to looting and then you move on,” said Bauer. Since „A few years later I realized that anything is possible in France.”

But Power primarily blames Macron himself for the chaos, saying of the president: “For the first time I see an arsonist surprised that there is a fire.” This actually sparked a civil war in New Caledonia.

In response to the resounding defeat of the Ennahdha Party in the European elections, Macron dissolved the National Assembly and announced new elections for the French House of Representatives in two rounds on June 30 and July 7. In the latest opinion polls, the National Front is leading with 35 percent, followed by the green left electoral alliance, the New Popular Front, with just under 30 percent. The government camp lags behind by about 18 percent.

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Demonstrators storm the parliament building in Kenya

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Demonstrators storm the parliament building in Kenya

As of: June 25, 2024 at 5:24 p.m

The Kenyan government plans to increase some taxes. Thousands of people protested in the capital, and some of them stormed the parliament grounds. The situation is currently unclear, and it appears that there are dead and wounded.

During the debate on controversial tax increases, demonstrators stormed the parliament grounds in the Kenyan capital, Nairobi. Images broadcast on Kenyan television showed several hundred people overcoming police barricades.

ARD correspondent Thelko Glasgen Reports from Nairobi of a “very confusing” situation. The police acted brutally and opened fire on the demonstrators. According to the human rights organization Kenya Human Rights Commission, at least one person was killed. Reuters reported, citing a paramedic, that at least ten were killed and about 50 wounded. This has not been confirmed yet.

Fire in Parliament and City Hall

Protesters set fire to parts of Parliament and Nairobi City Hall, Glasgen reported. Television footage showed broken windows and damage to the parliament building. The deputies are said to have fled.

Chanting, „Ruto must go,” the demonstrators, most of whom were young, demanded the resignation of President William Ruto and effective public administration. The country’s internet service was also widely disrupted during the protests, NetBlocks said, citing real-time network data. Demonstrations and clashes also took place in several other places in the East African country.

higher Cost of living He is afraid

However, Parliament approved the Finance Law. At the time of the raid, the third reading of the controversial tax law was taking place in Parliament. Two-thirds of the representatives voted in favor of it. The law will now be presented to President Ruto for his signature.

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Many people fear that the law will increase the cost of living. Among other things, an environmental tax is planned that will increase the prices of hygiene products for women and children. The government has already made some concessions, promising to cancel new taxes on bread, cooking oil, car ownership and financial transactions. But the demonstrators are demanding the complete repeal of the law.

Two people were killed in the last protests

There have already been protests in the past few days in which two people were killed. Civil society groups said members of protest groups who were moved from their homes and workplaces before Tuesday’s demonstrations were missing. Speaker of Parliament Musa Wetangula ordered the Inspector-General of Police to provide information about the people the opposition said were abducted by the police.

Kenyan President William Ruto is not particularly popular among young Kenyans. But the new taxes have also angered many of Ruto’s former voters. Due to rising inflation in the East African country, the already small middle class has shrunk again. Many in Kenya still live in poverty.

Navina Couture, RD Nairobi, Tagischau, June 25, 2024, 3:12 pm

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