The Bunker Group
I do believe it is one of the thinking from those 'pundits' that Western Politicians use when they want to punish Russia with this trade war. Put severe embargoes to Russia, and they will break down. Mostly due to the thinkin that Russia can not replace imported basic goods or materials they need to produce domestics production. I have put in this thread some time ago during the first days of this trade war from some market analysts, that caution the West the effect might not be as big as West hope. Especially if Russia can create enough import substitutions or switching some imports as you have put.believe, and correct me if I am wrong, that the crash in Russian imports has led many analysts astray. This is usually an indicator of a rapid decline in economic activity which leads to GDP contraction, and as such was often cited as evidence of rapid decline of Russian economy. However this may not be the case (or at least all of the case), introduction of sanctions and restrictions have made it very difficult for Russian enterprises to import not only western but commodities from the rest of the world, this has also led many to conclude that there will be major goods shortages which would drive inflation.
Despite damaging Western sanctions imposed on Moscow in the wake of the invasion of Ukraine, Russia's economy appears to be weathering the storm better than expected as it benefits from high energy prices,…
Seems they are manage to soften the blow so far, as even IMF (reluctanly I suspect) begin to agree. Their now prediction of -6% contraction not much different then what some in market predict of less than -5% contraction as I have put in my previous post. And IMF also agree as market predict before of 22/23 needed for any asjustment.
One thing many in West seems not realise, Russian domestic substitutions not need to be on same quality of what their import before.
Look at this Lada, it is basically has technology of a decade plus ago. It is in similar specs what Chinese produce before 2010. However this means they not need as much as semiconductor as present car needed, for example. It is cheap and simple car, that Western market catagorise it as crap. However it is what Russian now ask their car producers build. Cheap and simple car that will not need much of import components. In a way, it is like what USSR done before, but Russian hoping for more bigger production run to replace imports. After all if Iran still can produce cars with 90's tech for their domestic demand, why can not Russia doing the similar thing with tech from a decade ago.
As automotive production data in H1 this year come out, it is shown depress automotive production:
Auto production in Russia has slowed to a crawl after major automakers exited and Western governments imposed debilitating sanctions on Moscow in response to its invasion of Ukraine. Russia manufactured 3,700 cars in May, 97% fewer than the same month last year, the country’s statistics agency...
However if we see the drop in Truck and Bus not as depresed as Car. This shown their commercial sector and logistics still not depress as much as previously Western politicians hoping. It will remain to be seen on their Car production retooling strategy work. Making more model that more suitable with domestics supplied materials (and perhaps some from China). However this is going to shown that Russian domestics demand for foreseable future will not be supply by same standard products as they use to have from Western Imports before.
This in the end price for economics decoupling by Russian to the West. On the other hand West going to do the same decoupling with Russian imports. This what market expect at least will take 2022 and 2023 for the adjustment to this decoupling be made.