The most severe set of sanctions imposed on any country in the modern era could leave Russia’s economy stagnant for years.
According to a top banking executive, it may take a decade for Russia’s economy to recover from the crippling sanctions imposed on the country following its invasion of Ukraine.
Returning to pre-sanctions levels could take nearly a decade as Russia remains cut off from 50 percent of its trade, according to German Gref, the head of Russia’s largest bank, Sberbank.
Mr. Gref estimated that the countries that severed ties with Russia accounted for 56% of its exports and 51% of its imports, thereby crippling the economy.
At Russia’s annual international economic forum in St. Petersburg, chief executive Mr. Gref stated, “This poses a threat to 15 percent of the country’s gross domestic product; the majority of the economy is at risk.”
As a result of Russia’s invasion of Ukraine in February, dozens of multinational corporations withdrew from the country, and a large group of nations cut off Russia’s access to the international financial system and seized the properties, yachts, and private jets of President Vladimir Putin’s allies.
The economic isolation imposed on Russia caused the stock market and the rouble to crash, the price of household goods to skyrocket, and the government to implement stringent capital controls.
In addition, the Russian central bank increased the interest rate from 9.5% to 20% before reducing it in June.
As a result of sanctions, and “if we do nothing,” it could take approximately a decade to return the economy to its levels in 2021, Mr. Gref stated.
Additionally, the chief executive advocated structural reforms for the Russian economy.
Russia has been harmed by the severing of its key logistical arteries; Russian ships have been prohibited from entering European Union ports, and European airspace has been closed to Russian airlines due to sanctions.
According to Mr. Gref, cargo shipments have decreased by a factor of six.
To “further weaken Putin’s war machine,” the United Kingdom imposed new sanctions on trade worth £1.7bn with Russia in May.
They include sharply increased tariffs on imports worth £1.4 billion from Russia and export bans worth £250 million annually.
The measures, which were announced by Chancellor Rishi Sunak and Trade Secretary Anne-Marie Trevelyan, bring the total value of products subject to full or partial import or export sanctions since the invasion of Ukraine to over £4 billion.
The EU recently announced its intention to halt its purchases of Russian oil and gas, which currently generate more than $1 billion per day for the beleaguered nation.
