For many reasons, most people underestimate the impact of the Western sanctions on Russia. They are likely to become far more severe over the next few months.
1. The financial sanctions had immediate impact, but they will hit harder, as free CBR reserves run out & more banks hit.
1. The financial sanctions had immediate impact, but they will hit harder, as free CBR reserves run out & more banks hit.
2. In the first 5 weeks, the CBR spent $40 bn of reserves, but it had only $62 bn liquid reserves not sanctioned. Thus, the ruble exchange rate is hardly tenable but is likely to fall unless complete regulation.
3. The biggest blow might be the Western export controls. Russia cannot import almost anything it needs as inputs in its manufacturing. It can't produce cars, tanks, missiles, hygiene products or even print paper. Imported inputs are needed everywhere.
4. Most transport - air, trucks, trains, and shipping - is not sanctioned, aggravating the trade sanctions.
5. Russia has become uninsurable and then hardly anything can be done commercially in or with the country.
5. Russia has become uninsurable and then hardly anything can be done commercially in or with the country.
6. The EU has already decided to stop coal imports. The oil imports will soon be slashed (54% of import value) and so will gas (14% of import value).
7. 700 big multinationals have decided to stop doing business with Russia as it is bad for your reputation.
7. 700 big multinationals have decided to stop doing business with Russia as it is bad for your reputation.
Therefore, I don't think that Russia's GDP this year will fall by only 10-15 % (consensus) but much more.
One person is responsible for this madness: Putin.
Why would the Russian people accept to be ruled by such a madman for long?
One person is responsible for this madness: Putin.
Why would the Russian people accept to be ruled by such a madman for long?
Typo, should be: most transport is NOW sanctioned.
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