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Sanctions: what economic consequences for Russia?

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The sanctions taken by Western countries against Russia have serious consequences for its economy. The value of the rouble, the national currency, has collapsed and the country may soon be in default.

The European Union has extended its sanctions against Russia. 160 new people have been added to its blacklist of Russian oligarchs and politicians whose assets in Europe have been frozen. Economic sanctions have been raining down on Putin’s country since the start of the war. The rating agencies even fear that the country will no longer be able to repay its debt downgraded to the letter C. Default of payment is imminent for the country and the latter is not without consequences for the Russian economy.

“A major financial crisis”

First, Russia would be seen as a country unable to honor its financial commitments and repay its creditors. This probability of default has just gone from 50 to 80% in one week and the ruble has collapsed, losing more than two thirds of its value. With the announced reinforcement of the sanctions, in particular the American embargo, Russia will be quickly impacted, explains André Carta Panisse, member of the Circle of economists: “it is clear that it is an economy which is drying up, which can no longer continue to operate as it is”, analyzes André Carta Panisse at the microphone of Europe 1.

“And so, if this really leads to a kind of forced autarky vis-à-vis the Western world, it is clear that this will directly affect Russians, households, purchasing power, prices risk exploding. The currency It is also likely to continue its fall. So, it is an economic disaster scenario which, obviously, had been underestimated”, he continues. According to other economists, Russia would have enough to live for a year in this quasi autarky regime. This default by Moscow would be unheard of. Since 1998, the country had gone through a major financial crisis and had to wait twelve years to borrow again on the markets.

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