Russia Stops Publishing Most Economic Data
Blinds Western besiegers but also means Russian citizens and analysts are left in the dark
Source: The Wall Street Journal
The West’s window into the Russian economy is closing.
In recent days, authorities stopped publishing data on government debt, trade statistics and oil production. The central bank limited the volume of financial information that local banks have to publish regularly while lawmakers are working on a bill banning lenders from sharing data with foreign states.
The growing blackout is part of an effort by the Russian authorities to protect the economy and domestic companies from further sanctions by the West following Moscow’s invasion of Ukraine.
Limited data means that Washington and Brussels will have less visibility on whether and how their sanctions are biting into the Russian economy, making it more challenging to find new targets and fine-tune future sanctions rounds.
“They are trying to obscure the economic picture,” said Elina Ribakova, deputy chief economist at the Institute of International Finance. “We have bans on Russian media and now the same goes for statistics access. The Iron Curtain is coming up from both sides.”
The sanctions have cut off Moscow from much of the Western financial infrastructure. Economists are predicting a deep recession, combined with steep inflation. Russian unemployment is rising amid an exodus of Western companies.
Last week, a branch of the Russian energy ministry that releases monthly oil production and export data said it was limiting “the dissemination of information that can be used as additional pressure on the Russian market and its participants,” according to Russian state newswire TASS.
The agency has indefinitely stopped the distribution of monthly crude oil production data as well as data on the shipments of fuel oil from Russian refineries and gas-processing plants to domestic and export markets, TASS said.
Such information from one of the world’s top oil producers is crucial at a time of high crude prices. Russian President Vladimir Putin recently said that Western sanctions have stymied Russia’s energy industry. While oil-data watchers have more than one way way of collecting statistics, including tanker tracking and information from traders, the lack of timely official Russia numbers would make it harder to monitor global supply.
In that way, the data limits help “cloud the picture of the problems the Russian energy industry is facing,” said Mikhail Krutikhin, a partner at independent consulting firm RusEnergy.
The blackout isn’t total: The government still publishes mainstay figures such as those for inflation, gross domestic product and a host of other data. But the scope of the releases has narrowed.
On Tuesday, the central bank suspended the release of the foreign-debt payment schedule, which typically lays out the external debt that Russia needs to pay in a schedule based on its maturity. Paying foreign debt has become a sensitive issue as Moscow teeters on the brink of a default on its international bonds. With a big chunk of its foreign reserves sanctioned, Russia now can’t make certain payments in dollars. Earlier this month, S&P Global moved Russia into default on its foreign-debt credit rating after the government attempted to make a payment on a dollar bond to investors in rubles.
A spokesperson for Russia’s central bank didn’t respond to a request for comment.
On Thursday, the country’s Federal Customs Service suspended its monthly publication of data on exports and imports. The data normally contain thousands of categories of goods and services that Russia imports and exports, including items as varied as live sheep, nuclear equipment and vulcanized rubber.
“I support this decision and consider it justified in order to avoid incorrect estimates, speculations and discrepancies in terms of import deliveries,” said the head of service Vladimir Bulavin. The central bank had earlier also suspended the publication of trade data.
Analysts may be able to reconstruct some of the trade impact on Russia by examining data from its top trading partners, but it is a laborious process and it could take time for a picture to emerge.
On the banking front, local lenders won’t be required to publish some financial statements for the period from Dec. 31, 2021 to Oct. 1, 2022, the central bank said Tuesday. Banks also don’t have to disclose capital and risk information during the same period. And on Wednesday, the State Duma, Russia’s lower house of parliament, approved a draft bill that would ban Russian banks from sharing banking secrets with foreign states. That includes data on customers and their transactions as well as about beneficiaries and beneficial owners.
Restrictions on banking data could conceal a banking crisis. Sanctions imposed by the U.S. and European nations were aimed at hobbling Russia’s financial system. It cut major Russian banks’ access to the dollar and other reserve currencies and severed some of the lenders from the Swift global-payments messaging system.
Last month, the central bank said it would temporarily cut the volume of financial reporting required from lenders to “limit credit institutions’ risks associated with the sanctions imposed by Western countries.”
The data blackout “can impact the design of sanctions, particularly financial sanctions, if crucial information is missing,” said Maria Shagina, visiting senior fellow at the Finnish Institute of International Affairs.
The blackout represents a U-turn for Russia, which built a robust infrastructure for data gathering and dissemination following the fall of the Soviet Union. Russia had worked for years to improve its creditworthiness with foreign investors and was rated investment grade before the war.
While official statistics from other emerging markets often have been criticized by analysts and international institutions for their data quality or government influence, Russian data have been widely accepted by independent economists.
“It used to be: Publish it unless there is a reason to hide it. Now it looks like: Hide it unless there is a reason to publish it,” said Janis Kluge, an expert on the Russian economy at the German Institute for International and Security Affairs. “As long as the data was not too political, the statisticians could continue publishing it.”
One exception was official mortality figures during the pandemic, which revealed a discrepancy between lower official Covid-19 deaths and significantly higher excess mortality, or deaths above the long-term average. Analysts have accused Russia of undercounting Covid-19 deaths and playing down the pandemic’s severity, a charge Russian authorities have denied.
Now, the limits imposed on official statistics are much more widespread—and economists expect the data restrictions trend to continue.
“It’s getting more and more challenging and we might get to a point where we’d be inferring from satellite photos about what’s happening in the Russian economy,” Ms. Ribakova said.