In the four months since it went to war with Ukraine, the Kremlin has blocked public access to an unprecedented volume of economic statistics. Those operating outside the government machine have been left working in the dark, with the quality of independent evaluations and predictions suffering accordingly. 

Officially, the statistical blackout is aimed at protecting Russian companies and individuals from Western sanctions. It’s more likely, however, that the Kremlin is afraid of publishing data that reveal the full scale of the economy’s collapse or the extent of monthly spending on the war. Similarly, it may be concealing the formation of new channels for shadow imports that could be tracked. 

Since April 2022, the Russian authorities have restricted access to all foreign trade statistics, including those relating to exports, imports, and trade within the Eurasian Economic Union (EAEU). 

The head of the Federal Customs Service, Vladimir Bulavin, has said the new levels of secrecy are needed to prevent “improper evaluations, speculative trading, and misinterpretations where imports are concerned.” For comparison, prior to the war, the Russian customs service only classified data related to the trade of military goods, aircraft, and nuclear materials. 

Freely available import statistics really could be dangerous for the Kremlin. They would shed light on a key problem for Russian manufacturers: structural deficits resulting from the exodus of foreign component suppliers and the breakdown of technical and production chains. 

The scale of this issue was already clear in figures for industrial production in April provided by Rosstat, Russia’s state statistics service. In comparison with April 2021, auto manufacturing fell by 85.4 percent, production of elevators by 48 percent, washing machines by 59 percent, and refrigerators by 46 percent.

Cars, equipment, and other vehicles made up almost half of Russia’s total imports (49.2 percent) in 2021, while in May new car sales in Russia plummeted by 83.5 percent. “Unfriendly states” that have imposed sanctions on Russia accounted for about 62 percent of imports last year. The technological isolation of the Russian economy will lead to a fall in the standard of living: technology, cars, construction materials, and much more will either be hard to find or beyond the reach of many due to price hikes.  

Without access to Western technology and goods, Russia’s technological development will unavoidably be reversed, including in key sectors such as oil and gas. Secondary sanctions applied by the United States will also restrict the import of technology from China, exacerbating Russia’s backslide. 

Another possible goal in concealing trade statistics is preventing Western governments from getting an accurate picture of the scale of shadow imports of sanctioned goods, and providing cover for third-party countries supplying such goods to Russia, allowing them to avoid secondary sanctions. This goal will become possible if Russia reaches informal agreements masking flows of goods from certain neighbors, such as EAEU member Kazakhstan, and Turkey, which has been able to profit from anti-Russian sanctions. 

Previously, Russian export statistics allowed the trends, volumes, and directions of oil and gas supplies—of crucial importance to the Kremlin, and currently bringing in record surpluses—to be tracked. Oil and gas exports will provide Russia with a record $285 billion in 2022, according to Bloomberg estimates. The federal budget’s oil and gas revenues for January grew by 45 percent in annual terms, shooting up from 3.1 trillion rubles to 5.7 trillion rubles, according to official Russian statistics. 

The data of other countries importing from Russia are still available, but aren’t always enough to provide a complete picture. Oil is an excellent example, as it’s not easily tracked. It’s possible, for example, that Europe is importing a significant amount of Russian Urals, but it’s impossible to be sure, as it’s mixed in with other variants and listed in the statistics under a different name. 

Foreign trade is far from the only area that has been subjected to new levels of secrecy. The central bank, for example, has stopped publishing information on the structure of Russia’s international reserves: from the end of March, only figures for total amounts have been updated, with no detailing of the specific assets. Following the imposition of sanctions on its banking regulator, Russia has lost access to about $300 billion kept in Western countries: about half of the reserves that Russia had built up by the start of the war. Only gold and Chinese yuan have been left under the central bank’s control. 

Similarly, the government has allowed Russian companies to stop publishing data until the end of 2022, while the central bank no longer requires banks to provide the key data stipulated by Russian accounting standards. The central bank has also permitted financial organizations, including non-state pension funds and insurance companies, to conceal information on controlling individuals and participants in their management bodies. Rosaviatsiya, the federal air transport agency, stopped publishing data on airline and airport passenger volumes in March, and so the list continues. 

The deficit in information has been made worse by the departure of foreign companies that previously supplied hard statistics. Soon after the war began, the financial services company Refinitiv left Russia, and access to Bloomberg terminals was lost. This has hampered the work of independent analysts and raised costs for businesses, which now have to buy data elsewhere. 

Finally, from May 2022, the Kremlin has deprived all Russian taxpayers of information on how the state is spending their money: the Finance Ministry has classified current information on all federal budgetary expenditure and the sources of financing for its deficit. In April, on the eve of this change, budgetary statistics showed a rise in Russia’s military expenditure of almost 150 percent (630 billion rubles, up from 275 billion rubles in April of 2021), with a fall of 18 percent in income from sectors other than oil and gas. It is now impossible to accurately track current monthly spending on the war, the economy, and social obligations. All that remain are the aggregate figures for expenditure and income. 

Rosstat’s main economic indicators are still freely available, but there are growing questions over their reliability. As early as 2020, during the pandemic, the practice of releasing data in the evening was instituted in order to minimize attention on the more disappointing figures. Particularly sensitive indicators, such as demographic statistics showing a catastrophic contraction of the Russian population, are now only released every Friday evening. Previously, Rosstat figures were released during the day and on an almost daily basis. 

There have long been concerns over the quality of Rosstat’s evaluations, first and foremost as a result of regular retrospective reviews with figures being massaged in the required direction. In 2019, the economist Kirill Tremasov, following yet another such review, described it as “a drawing, rather than statistics,” leading to a public dispute with then economic development minister Maxim Oreshkin (now Vladimir Putin’s aide on the economy). A month later, Rosstat stopped its monthly publication of a key social indicator reflecting changes in Russians’ incomes. In May 2022, Sergei Galkin, a former subordinate of Oreshkin’s at the Economic Development Ministry, took over as head of Rosstat. 

Political considerations determine which data should be concealed, and this is done to hide both weak and strong points, a source at Rosstat explained, adding that officially, the authorities are under no obligation to publish economic statistics. 

The Federal Plan for Statistical Works specifies which indicators should be calculated by which ministries, but it does not stipulate whether they should be published. “The state has all the necessary information for making decisions. Businesses, the expert community, and journalists have less information right now,” the source noted. 

Classifying economic and budgetary statistics as secrets makes it harder for all players in the domestic economy to understand what is happening, worsens the quality of analysis and public debate, and leads to speculation on the markets based on fragmentary data. Only the internal evaluations of state officials are regarded as authoritative, and they may have their own reasons for distorting the data, not least to keep their bosses happy.

Russia’s economic statistics and budget, however, are now viewed squarely through the “besieged fortress” mentality, cut off not only from the outside world, but also from Russians themselves. 

By:
  • Yulia Starostina