Far from Putin’s claims of resilience, the Russian economy is being plagued by sanctions and the exodus of international companies, the Yale report says

Media reports trumpeting the resilience of Russia’s economy in the face of the international response to its invasion of neighboring Ukraine are based on misconceptions that don’t reflect what’s happening on the ground, according to a new paper from the Yale School of Management.

The report, titled “Business Pullbacks and Sanctions Cripples Russia’s Economy,” found that the sanctions — and the exodus of more than 1,000 global companies — are a far cry from the “prosperity” touted by the Kremlin and Russian President Vladimir Putin’s catastrophic impact .

The report drew on private Russian-language and unconventional data sources, including high-frequency consumer data, cross-channel audits, publications from Russia’s international trading partners, and data mining of complex shipping data, according to the authors, led by Professor Jeffery Sonnenfeld, senior associate, according to the Dean of Leadership Studies at the Yale School of Management.

“Our analysis makes it clear: business downturns and sanctions are catastrophically crippling the Russian economy. We combat a wide range of common misperceptions – and shed light on what is actually going on in Russia,” the report said.

See now: Despite many talks, many US companies have not yet completely left Russia: Moral Rating Agency

Related: The Kremlin could seize Russian assets from US companies, Moral Rating agency warns

(For a brief synopsis of the report, see this TikTok video of Canadian Steve Boots making political comments on social media.)

The Yale team has tracked the companies that have left Russia since the war began – and those that have not – and found that those who drop out of the stock market are rewarded while those who remain are punished.

See now: According to the Yale study, companies that left Russia after the invasion of Ukraine are rewarded with inflated stock market returns – and those that stayed are not

Key findings of the report include:

• Russia’s position as a commodity exporter “has irrevocably deteriorated” as it has lost access to its former main markets and faces challenges to shift to Asia with unsustainable exports such as pipeline gas.

Source: Yale School of Management report

• Russian imports have also largely collapsed and the country is struggling to secure key inputs, parts and technology from reluctant trading partners, leading to serious supply shortages.

• While Putin boasts of the country’s self-sufficiency, domestic production has ground to a halt with no capacity to replace lost businesses, products and talent. At the same time, Russia faces the same rising prices and consumer fears as most parts of the world.

Source: Yale School of Management

• The inflation picture for sectors dependent on international supply chains is even grimmer at 40% to 60%, affecting a number of key industries. The report describes how some Russian manufacturers cannibalize and recycle parts, and quotes US Commerce Secretary Gina Raimondo as saying that Ukrainians are finding Russian military equipment with semiconductors removed from dishwashers and refrigerators.

Source: Yale School of Management

• The retreat of so many companies has cost the country about 40% of its GDP and reversed nearly three decades of foreign investment.

“Putin is resorting to patently unsustainable, dramatic fiscal and monetary interventions to address these structural economic weaknesses, which has already pushed his government budget into deficit for the first time in years and depleted his foreign exchange reserves even amid high energy prices – and the Kremlin’s finances are in a much, much worse plight than is conventionally believed,” the authors wrote.

• Russia’s domestic financial markets have been the worst performers in the world this year, despite tight capital controls. At the same time, it is cut off from accessing global capital markets to revitalize its economy.

Source: Yale School of Management

“Looking ahead, there is no way out of economic oblivion for Russia as long as allied countries unite in maintaining and increasing sanctions pressure on Russia, and the Kyiv School of Economics and the McFaul-Yermak Working Group have paved the way, additional sanctions to propose sanctions,” the report said.

“Defeatist headlines arguing that Russia’s economy has recovered are simply not factual – the facts are that Russia’s economy is faltering in every way and at every level and now is not the time to hit the brakes kick,” she concluded.

Background: The Yale professor, who oversees companies still doing business in Russia, ups the ante by highlighting those who are now “digging in”.

For the full list of companies: Visit the Yale School of Management website