The Russian economy contracted steeply in the second quarter as the country felt the brunt of the economic consequences of its war in Ukraine, in what experts believe to be the start of a yearslong downturn, the New York Times reported. The economy shrank 4 percent from April through June compared with a year earlier, the Russian statistics agency said on Friday. It is the first quarterly gross domestic product report to fully capture the change in the economy since the invasion of Ukraine in February.
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Several major Wall Street banks have begun offering to facilitate trades in Russian debt in recent days, according to bank documents seen by Reuters, giving investors another chance to dispose of assets widely seen in the West as toxic. Most U.S. and European banks had pulled back from the market in June after the Treasury Department banned U.S. investors from purchasing any Russian security as part of economic sanctions to punish Moscow for invading Ukraine, according to an investor who holds Russian securities and two banking sources.
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Several countries in Europe dependent on Russian energy suffered another with confirmation Tuesday that oil shipments have stopped through a critical pipeline, the Associated Press reported. Russian state pipeline operator Transneft said it halted shipments through the southern branch of the Druzhba oil pipeline, which flows through Ukraine to the Czech Republic, Slovakia and Hungary. Transneft cited complications due to European Union sanctions for its action on Aug. 4, saying its payment to the company’s Ukrainian counterpart was refused.
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Russia's economic contraction will deepen in the third quarter of 2022, while its strong current account surplus, the key driver of the rouble's recent rebound, will shrink in the second half of this year, the central bank said on Monday, Reuters reported. Russia's export-dependent economy is plunging into recession after Moscow sent tens of thousands of troops into Ukraine on Feb. 24, triggering sweeping financial and economic sanctions from the West.
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U.S. investors participating in credit-default-swap auctions are allowed to buy Russian sovereign debt, according to new guidance from the U.S. Treasury Department, potentially reducing losses for some investors who sold protection against a Russian default in the years leading up to the war in Ukraine, WSJ Pro Bankruptcy reported.
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European natural gas prices jumped more than 10% on Wednesday after Gazprom PJSC said it will halt another turbine and reduce flows through the Nord Stream pipeline, Bloomberg News reported. The key pipeline will pump 33 million cubic meters a day, or just 20% of its capacity, from Wednesday as another turbine is halted for maintenance, Gazprom said in a statement. The move poses further risks to Europe’s gas supply ahead of winter.
Moving in the opposite direction to much of the rest of the world, Russia’s central bank lowered its interest rate 1.5 percentage points to 8 percent on Friday, taking it even lower than it was before the country invaded Ukraine, the New York Times reported. The bank said inflation, which fell to 15.9 percent last month from about 17 percent in May, was slowing in the country because of “subdued” consumer demand and the strength of the ruble, which reached a seven-year high against the dollar last month. The rate cut was larger than economists had expected.
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Russia and Ukraine signed separate agreements Friday to reopen blockaded Ukrainian ports and allow grain exports to begin to flow, Axios reported. Ukraine is one of the world's top exporters of wheat, sunflower oil and other agricultural products. With those exports almost entirely blocked due to Russia's Black Sea blockade, the food crisis plaguing countries in Africa and elsewhere has deepened. The deal, which was brokered by the UN with the help of Turkey, would be in place for 120 days and can be renewed, UN officials said.
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Russian natural gas began flowing again at a reduced volume through a critical pipeline into Europe on Thursday, buying time for governments to decouple from the Kremlin’s exports amid what they expect will be an increasingly unreliable supply of energy from Moscow heading into the winter, the Wall Street Journal reported.
The number of Russian citizens who have declared bankruptcy and faced liquidation in the first half of 2022 rose by 37.8% over the same period from last year, a Russian Ministry of Economic Development report shows, the Egypt Independent reported. From January to the end of June, 121,313 Russian citizens filed for bankruptcy and had their assets liquidated to pay off debts, the report stated. Among them, the largest number of bankruptcy declarations were from Moscow at more than 6,000 individuals, followed by the region surrounding the capital, with more than 5,600.