The Russian Economy and Other Stories

Well, this morning, I came across this piece. It’s unsurprising since the Russian economy has been under incredible strain for the last three years. So now it’s pretty much in the open:

“The Economy is at Risk.” A “Tsunami” of Bankruptcies is Coming to Russia

The Russian economy “faces the threat of a large-scale jump in corporate bankruptcies,” according to a report by the Center for Macroeconomic Analysis and Critical Policy (CMAPC), an analytical center close to the government and headed by the brother of former presidential economic aide and current Defense Minister Andrei Belousov.

As experts at the center note, Russian business is being pushed to the brink of a financial abyss by a sharp increase in interest rates on loans following the key rate of the Central Bank, which at the end of last year reached a record level in more than 20 years — 21% per annum. At present, every fifth enterprise in the manufacturing industry is forced to give two-thirds of its pre-tax profit (EBIT) to debt servicing. And this is a “risky level,” the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF) points out.

The amount of profit from which businesses could pay interest on loans is also decreasing — by 17%, or 5 trillion rubles, according to Rosstat , for January-October.

Coal industry companies, which have accumulated 80 billion rubles in losses due to sanctions and the collapse of exports, are at risk of bankruptcy; 800 shopping centers…