Fifteen years of Russian economic progress erased by the sanctions imposed on Moscow. Here is what a report from the Institute of International Finance (IIF) published on Wednesday reveals.
However, the impact of these measures remains difficult to predict as they are constantly changing, with potential new sanctions on the one hand and a possible response from Russia on the other, particularly in the energy sector. In its latest analysis, the IIF predicts that the Russian economy will contract by 15% this year and another 3% in 2023.
The war is likely to be more costly for Russian President Vladimir Putin. For IIR economist Elina Ribakova, the operation of these sanctions cannot be likened to a switch to be flipped.
“The most significant consequences have yet to be felt”
The financial sanctions – including the reduction of Moscow’s ability to repay its foreign debt – are slowing domestic demand, “thereby darkening the economic outlook in the short, medium and long term”, according to the authors of the report. For them, “some of the most significant consequences have yet to be felt”.
According to IIR Executive Vice President Clay Lowery, assessing the effectiveness of sanctions imposed on Russia depends on what governments are trying to accomplish. “If by success you mean hurting the economy (…) then these sanctions are definitely having an impact,” and that should increase, he told reporters.
However, in the past, sanctions have not proven effective in changing course policies, he added.