A leaked document from Russia privately admits that Russia is bound to face the largest economic collapse in recent history because of devastating sanctions from the West.

The document, obtained from the Russian Finance Ministry by Bloomberg, predicted that the Russian economy would fall by a staggering 12% in its Gross Domestic Product (GDP) for this year. To put this into perspective, the figure will be the largest drop-off in Russia’s GDP since 1994, when the country was stumbling towards a capitalist market under Boris Yeltsin’s administration.

The Russian government has not yet released an official economic outlook since the start of Vladimir Putin’s invasion of Ukraine in late February. However, insider information within the country’s economic ministry says that the agency predicts a more optimistic 8% decline in GDP this year.

“Preparation of official macroeconomic forecasts does not fall under the Finance Ministry’s authority,” the Russian Finance Ministry said, claiming the leaked information was inaccurate.

”(The Ministry) expects that the measures taken by the government and the Bank of Russia will make it possible to ease to a large extent the negative consequences of sanctions and ensure stable economic development,” it added.

Saratov Oil Refinery, Russia (Alexxx1979, CC BY-SA 4.0 , via Wikimedia Commons). Source: https://commons.wikimedia.org/wiki/File:Volga_river._Saratov_Oil_Refinery_P8090744_2200.jpg
Saratov Oil Refinery, Russia (Alexxx1979CC BY-SA 4.0, via Wikimedia Commons)

The Bank of Russia has said in April that it expects an economic contraction of 8 to 10 percent for 2022, while the International Monetary Fund forecasts 8.5%. If the prediction of the Russian Finance Ministry is true, such a decline could uproot decades worth of economic progress under the Putin administration, according to one insider.

This news will certainly add to the mounting pressure on Putin, who has been under fire by his own Kremlin officials who warned of severe economic and political repercussions of his “special military operation.” The ruble, Russia’s currency, might appear to hold strong, but the waves of economic sanctions from the United States and its allies are definitely taking effect.

The sanctions imposed against Russia affected the situation in the financial sector, spurred the demand for foreign currencies, and caused sales of financial assets, a cash outflow from banks, and surging demand for goods,” Governor of the Bank of Russia Elvira Nabiullina.