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Russia Faces ‘Reverse Industrialization’ in Sanction Squeeze

  • Bank of Russia publishes first detailed outlook since invasion
  • Long, deep recession seen with return of some 1990s phenomena
Shoppers walk past to closed stores at a mall, in Moscow, April. 19.

Shoppers walk past to closed stores at a mall, in Moscow, April. 19.

Photographer: Konstantin Zavrazhin/Getty Images

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Russia faces a very deep and prolonged economic contraction along with higher inflation and reduced living standards, as sanctions imposed by the U.S. and its allies over the invasion of Ukraine sap it of vital products and technology, according to economists at the central bank.

In the most detailed public statement on the outlook since the war started, the Bank of Russia’s Research Department warned in a report that “the depth of the contraction may be quite significant and exit trajectory drawn out in time” because the supply shocks triggered by sanctions are unlikely to fade quickly.