As foreign carmakers quit the country, Russian auto output in 2022 fell by 67pc to levels not seen since 1991. While the disappearance of foreign marques helped AvtoVaz to top the car league, its own sales fell 46pc. Reuters reported recently that parts shortages had forced the company to bring forward its annual three-week summer shutdown.

That’s a pattern that is repeated across a range of consumer durables as Russia moved its economy onto a war footing and the state has closed its grip on the private sector. Things weren’t that great even before sanctions – to be sure Russia has patched up its budget and debt vulnerabilities but since Vladimir Putin returned to the presidency in 2012, the economy has stagnated.

Sure, Joe Biden’s “shock-and-awe” didn't sink the economy and a predicted 8.5pc slump from the International Monetary Fund was way off the mark as rising energy prices and a shift to war-time production boosted output.   

But those headlines last year about how Europe’s demand for Russian energy was keeping prices high and feeding the Kremlin war machine are over and Moscow faces the prospect of rising budget deficits to keep the show on the road.

Even as exports hit a record $591bn (€541bn) in 2022, dwarfing Russia’s import bill, the country was still the only major oil producer to slide into recession with a 2.1pc decline in gross domestic product.

Sanctions have ramped up again with an EU embargo and the G7 price cap on seaborne Russian crude oil shipments, both of which have already hit volumes and the price Russia can realise from sales, which will apply pressure to this year’s budget. Moscow had already raided its rainy day fund for $53bn in 2022 when its finances were boosted by those strong oil prices.

Russia’s problems however go well beyond the ramp-up in sanctions in the past 12 months. Although it had built up hefty currency reserves and fixed its budget after the shocks of 1998 and 2008, the economy was not doing well.

In 2012, Russia was classified as a ‘high income’ country by the World Bank. Since then, and more specifically since the invasion of Crimea in 2014, the country has slid back into ‘middle income’ status. Although solvent, Russia’s economy was going nowhere even before its tanks rolled into Ukraine last February. Since 2014, it had been modelling sanctions on its financial sector and companies, as well as balancing the budget at an oil price of $45 a barrel.

It has not been run to maximise welfare for a considerable period of time. Its officials – including the well-regarded central bank governor Elvira Nabiullina – have created a stable macroeconomic environment in terms of small deficits, low public debt and – until last year – low inflation, thus making the country less vulnerable to shocks and sanctions.

With the war in Ukraine, the shift away from an economy that meets the demands of its consumers has become far more pronounced. According to a World Bank analysis published last week, military needs and import substitution have driven growth in sectors like fabricated metals – up 10pc, computers and electronics – up 4.1pc, and medical products which rose 12pc.

Russia should, by now, have diversified its economy. It has not and local manufacturing capacity is limited, even that needed to feed its invasion. Only 30pc of machine tools are made there and local industry doesn’t have the capacity to cover rising demand. It is a pure commodity play that is more reliant on energy exports than ever.

The sanctions themselves aren’t going to bring Russia’s aggression to an end. They do however make it more costly to pursue, both economically and politically, and the choices made by the Russian government are going to linger for some time, as the Bank of Finland’s Institute for Emerging Economies, which specialises in Russia analysis, notes.

It is also a country in the throes of a demographic crisis where deaths have exceeded births since 2016. Throwing hundreds of thousands of young men into a war will only make that worse, and combat deaths – put by some at 60,000 to 70,000 – will shift the demographics even more unfavourably.

It also now appears that up to half a million talented young Russians have chosen exile since Putin’s invasion, many of them skilled, educated workers.

The Gaidar Institute, an independent think tank, estimates nearly a third of industrial enterprises face record labour shortages because of Putin’s military mobilisation.

“It is difficult to reconcile an economic path that involves decoupling from the West and maintaining a war footing with a separate path that delivers sustained economic growth and a better standard of living for average Russians. After a year of war, it seems that Russia’s economic policymakers have chosen the first path,” the Bank of Finland researchers wrote in their latest report.

It’s now time to ramp-up sanctions again. Instead of capping prices of its crude oil blend at $60 a barrel, that could be squeezed down to $30. There’s also no reason for the EU not to sanction Gazprombank.

In the long term, the biggest winner from an enfeebled Russia will be China. It is a huge importer of food and energy and having Russia act as your filling station and breadbasket must be appealing. No wonder Xi Jinping is buddying up to Putin.​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​