Russia

Shipping traffic in and out of Russia has remained relatively strong in the past few months as companies have raced to fulfill contracts for purchases of energy and other goods before the full force of global sanctions goes into effect, the New York Times reported. With the European Union poised to introduce a ban on Russian oil in the coming months, that situation could change significantly. But so far, data show that while commerce with Russia has been reduced in many cases, it has yet to be crippled.

Consumer inflation in Russia accelerated in April to 17.83% in year-on-year terms, its highest level since January 2002, data showed on Friday, as it got a boost from the volatile rouble and unprecedented western sanctions that disrupted logistics chains, Reuters reported. But monthly inflation slowed to 1.56% in April from 7.61% in March when it staged the biggest month-on-month increase since January 1999, data from the federal statistics service Rosstat showed. Inflation in Russia has accelerated sharply after Russia began what it calls "a special military operation" in Ukraine on Feb. 24.

Moscow has imposed sanctions on the owner of the Polish part of the Yamal pipeline that carries Russian gas to Europe, as well as the former German unit of the Russian gas producer Gazprom, whose subsidiaries service Europe's gas consumption, Reuters reported. The entities on a list of affected firms on a Russian government website on Wednesday were largely based in countries that have imposed sanctions on Russia in response to its invasion of Ukraine, most of them members of the European Union.

European natural gas prices jumped as some shipments from Russia were disrupted, and Germany said Moscow was using energy as a weapon in an escalating clash over supply, Bloomberg News reported. The benchmark contract surged 14% as flows from Russia via Ukraine fell further Thursday following interruptions at a cross-border entry point as a result of the war. It adds to the market’s concerns, as Moscow retaliates to Europe’s penalties with a slew of its own curbs targeting some gas companies in the region.

Ukraine shut down a pipeline Wednesday that carries Russian natural gas to homes and industries in Western Europe, while a Kremlin-installed official in a southern region seized by Russian troops said the area will ask Moscow to annex it, the Associated Press reported. The immediate effect of the energy cutoff is likely to be limited, in part because Russia can divert the gas to another pipeline and because Europe relies on a variety of suppliers. But it marked the first time since the start of the war that Ukraine disrupted the flow westward of one of Moscow’s most lucrative exports.

Russia's weekly inflation rate eased further in early May, data from statistics service Rosstat showed on Wednesday, after spiking sharply soon after Russia began what it calls a "special military operation" in Ukraine on Feb. 24, Reuters reported. Inflation is slowing even after the central bank lowered its key interest rate to 14% from 17% in April and said it saw room for more cuts, as it tries to manage a shrinking economy and soaring inflation. Inflation was 0.12% in the week to May 6, down from 0.21% a week earlier and well below the 2.22% hit in early March.

As Russia faces another round of payments on its sovereign debt, Biden administration officials are weighing whether forcing Moscow into default for its invasion of Ukraine would really be the best outcome, Bloomberg News reported. Treasury Secretary Janet Yellen said Tuesday that the matter is being “actively examined” before a crucial deadline in two weeks, and a decision will be made shortly.

Italian Prime Minister Mario Draghi said on Wednesday he was confident Moscow's demand that European buyers pay for Russian gas in roubles will not lead to a disruption of supplies, Reuters reported. The European Commission has warned that complying with Russia's scheme might breach EU sanctions, but Draghi said it was a "grey zone" with no official ruling on the matter. Speaking during a visit to the United States, Draghi said he was "quite confident" about the supply situation for "a silly reason" that there was a lack of clarity on the rules after Russia's invasion of Ukraine in February.

An abrupt halt of Russian gas exports could see economies in emerging Europe, central Asia and north Africa slide back to pre-pandemic GDP levels, the European Bank for Reconstruction and Development (EBRD) warned on Tuesday, Reuters reported. Many countries in the EBRD's region of operation, which covers some 40 economies stretching from Mongolia to Slovenia and Tunisia, depend on Russian gas and a sudden ceasing of supplies would lower output per capita by 2.3% this year and 2% in 2023, according to the lender's latest report.

Russia is facing the deepest economic contraction in nearly three decades as pressure from sanctions imposed by the U.S. and its allies mounts, according to an internal forecast by the Finance Ministry, Bloomberg News reported. Gross domestic product is likely to shrink as much as 12% this year, deeper than the 8% decline expected by the Economy Ministry, according to people familiar with the estimates who spoke on condition of anonymity to discuss internal deliberations. The government hasn’t released a public forecast since the invasion of Ukraine.