An interesting phenomenon has arrived lately when Russia faced a war-like situation externally in Ukraine and internally in the form of grey zone operations. A new set of geoeconomics dynamics has seen the sunlight. Here are those:
Keeping the inflation at optimum level is one of the key developments that took place in Moscow and other major cities. Supermarkets were stocked with full of goodies mostly from the local manufacturers, closely followed by imports from friendly countries that did not participate in Western sanctions. That ensured that inflation rate that jacked up previously around 20% would fall below to normal range within weeks. This resulted in two plus points. One the prices hover around affordable level. Secondly, purchasing power of the consumer spending bruised in the beginning, stayed intact thereafter. In fact the demand & supply dynamics found a healthy equilibrium throughout.
Selective increase in wages was chosen to be implemented in sectors that are vital for the security and military aligned industry and thereafter an overall hike albeit somewhat higher was attempted in other sectors of domestic economy. At the end of the day, the real wages did not materially change as any artificial inflationary pressure was scuppered as plenty of supplies started to pour in.
Russian citizens who got monetary incentives via the state sponsored welfare activities were too careful enough not to squander this but use it for absolute gains of durables rather than relative gains in terms of buying up inflated consumer products. At the end of the day their economic staying put, was ensured.
This business strategy of domestic development had an overarching effect in economic growth for both imports and exports. The bottom line was both exports out of Russia and imports into the country enhanced the overall geoeconomics clout. A case in point is the international trade between Russia and host of countries including China, India and Iran among others in the global south.
The economic gain achieved thus far, was
judiciously invested in vital sectors for the survival of Russian economy, such
as oil, gas, gold and diamonds not to mention nuclear fuel sent even to
America. It was a concomitant part of business strategy to export over 20 nuclear power reactors to
countries such as China, Turkey and Hungary that accounted for the bulk of
exports amounting to US$ 400 M. There are several eastern European
countries such as Czechia and Slovakia along with others in Africa. The latest
addition is unsurprisingly is Iran.
The crux of the matter is Russia understood that to be a geoeconomics power player she needs to convert incoming financial flow into investing in export-oriented sectors rather than financing transient and unproductive consumer expenditure.
Cheers!
Muthu Ashraff Rajulu
Business Strategist
Mobile: + 94 777 265677
E-mail: cosmicgems@gmail.com
Blog: Business Strategist
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