Are western sanctions so terrible and how to contain their impact on the economy and population of Russia?

Abstract

Subject. The article considers the impact of US and Western sanctions on the economy and citizens of the Russian Federation after the start of the special military operation in Ukraine. Objectives. Our aim is to analyze the impact of sanctions on the Russian economy and its financial system, to identify economic determinants enabling to restrain this impact. Methods. The study draws on methods of scientific and information base, synthesis, grouping of obtained data. The methodological and theoretical basis consists of works of domestic and foreign scientists on the impact of economic sanctions on the development of individual countries and the world economy. Results. The study shows that the Russian economy has proved to be much more resilient to the impact of sanctions. The sustainability of Russia's economic system rests on four main factors: (1) sales of our export goods, due to price hikes and the absence of a complete embargo; (2) sustainable domestic consumption through extensive support to businesses and citizens, and tightening the State regulation; (3) structure and composition of GDP (the real sector of the Russian economy in GDP is almost 38%); (4) preservation and expansion of friendly relations with major powers that refused to join the restrictive measures of Western countries. Conclusions. The Bank of Russia should stimulate the country's economy, annually increase the amount of money supply, reduce the key rate up to 3% per annum by the end of 2023. This will increase investments in the economy and provide annual GDP growth.