The input—output analysis of the impact of trade sanctions on the Russian economy

The Russian economy operates under the constraints of sanctions and countersanctions introduced since February 2022. Their impact has been significantly weaker than initially anticipated. This article examines the influence of trade sanctions on Russia’s economy using input—output tables, which allow for the inclusion of intersectoral linkages in the analysis, combined with econometric tools. Export and import sanctions are considered separately. The effect of export sanctions is analyzed basing on the potential reduction in government demand, which leads to a decline in both oil-and-gas and non-oil-and-gas revenues of the consolidated budget. We expand our approach by including calculations of output changes in response to reduced intermediate imports, derived from econometric models. The article also examines the effects of import substitution of final goods in the economy, accounting for the potential increase in demand for intermediate imports. Import restrictions are largely overcome by business restructuring, changes in the structure of imports by country, and shifts in the structure of production within broad product categories.