- Sanctions against Russia have been 30% to 40% effective, a former finance official told Reuters.
- But the sanctions will interrupt Russia's economic growth for several years to come, said Oleg Vyugin.
- Russia's tech industry will also be impacted by sanctions, as it's reliant on foreign imports.
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Western sanctions against Russia over the invasion of Ukraine have been 30% to 40% effective, but there are headwinds to come, Oleg Vyugin, a former high-level finance ministry and central bank official, told Reuters on Tuesday.
His comments come as Russia's economy continues to appear resilient almost seven months into trade restrictions. Russia has put in measures to overcome the challenges posed by the sanctions, added Vyugin, who was a deputy finance minister and deputy governor at the Bank of Russia. He retired from the Moscow Exchange this year.
While sanctions have not been entirely effectively, Vyugin told Reuters that "the main result of sanctions is that the economic growth process in Russia has been interrupted for several years."
The country's economy started off strong in January and February and would have been on track for a 6% expansion in 2022 if it hadn't been sanctioned, said Vyugin. But there's now a "negative effect," he told Reuters, adding, "so sanctions work."
As it stands, Russia's economy contracted 4% on-year in the second quarter of 2022 — its first full quarter after the war started. Russia's economy ministry expects GDP to contract by 2.9% in 2022, a government official said earlier in September, per Reuters. That's significantly lower than what the World Bank projects: It expects an 11% contraction.
There could be more problems ahead for Russia as the European Union — Russia's largest customer — is weaning off its heavy reliance on Russian energy, with most crude-oil imports set to be banned by the end of 2022.
Vyugin said there will be "serious harm" to the economy if Russian exports are crimped.
The situation is not looking good on the imports front either, with a shortage of some products likely to hit Russia's industry badly. This will apply to the tech sector, where Russia is reliant on imports, Vyugin told the news agency.
"The world will move forward, but Russia will only use some second-grade technology and spend huge resources to recreate what there already is in the world, but can't be imported," Vyugin said. "If the situation doesn't change, Russia will see a gradual decline in the level of technological development."
Russian state-owned carrier Aeroflot has already started stripping spare parts from working aircraft due to supply shortages because of the sanctions, Reuters reported in August.