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Businessweek
Economics

Putin Clings to Russia’s Market Economy as Sanctions Wind Back the Clock

Preserving the illusion of normalcy is paramount, even as the import-dependent country reels.

Ikea’s announcement that it was temporarily closing some of its stores in Russia triggered a shopping frenzy.

Ikea’s announcement that it was temporarily closing some of its stores in Russia triggered a shopping frenzy.

Photo: Reuters

Two weeks into Russian President Vladimir Putin’s invasion of Ukraine, the fallout at home is starting to come into focus as the economy becomes increasingly closed off from the outside world.

Debilitating sanctions imposed by Ukraine’s allies have brought about a collapse in the value of the ruble and a mass exodus of foreign companies serving the Russian market. The combination is making it difficult for the country to continue importing critical goods, increasing prices dramatically for those it can still get, and threatening to push up unemployment sharply as production of everything from Nissan sedans to McDonald’s hamburgers grinds to a halt.