Russian economy on the brink as black market booms

Russia’s economy continues to suffer under the weight of Western sanctions imposed since the start of the war in Ukraine, with signs that the black market is surging and counterfeit goods are flooding local markets.

Kyrylo Shevchenko, the former Governor of the National Bank of Ukraine, warned that the underground economy in Russia is expanding rapidly.

“Russia’s black market is booming: 1 in 10 retail goods is now smuggled or fake, worth over $62 billion — a 58% jump in just four years. Thanks to sanctions, legalised parallel imports, inflation, and a freeze on inspections, counterfeit goods flood stores, markets, and online shops. Cosmetics, electronics, baby food — nothing’s off-limits. Nearly 1 in 3 Russians now knowingly buys fakes.”, he said.

He added in a post on X: “Short-term workaround? Hm, maybe. But long-term, the black market erodes tax revenue, undermines legal businesses, distorts market signals, and accelerates Russia’s shift toward an unstable, informal economy. It will get out of control.”

At the same time, Russian exports to China — one of its largest trading partners — dropped by 8.2% from January to May this year.

The economic strain on Moscow could worsen further if the European Union approves a new round of sanctions currently under discussion.

(QG - Source: The Daily Express - Picture : © Unsplash)