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Ministry Says Harsher Sanctions Would Cost Russia 0.3% of GDP

Published: July 12, 2014 (Issue # 1819)



  • Russian economic growth has been sputtering since 2012 and the country entered technical recession in the first half of 2014, according to HSBC.
    Photo: Maxim Stulov / Vedomosti

An upsurge in international tensions and further sanctions slapped on sectors of the Russian economy over the country's annexation of Crimea from Ukraine would cost Russia 0.2 to 0.3 percent of the GDP this year, according to Russia's Finance Ministry.

But longer-term implications could be broader, crippling the country's much-needed modernization drive and hampering Russia's ability to emerge from an sharp economic slowdown, the ministry said Thursday a budgetary policy outline for 2015-2017 published on its website.

In the international furore that followed Russia's land grab in March, the European Union blacklisted about 60 Russian top officials, businessmen and companies, while the U.S. sanctioned some 50 names, banned cooperation in the nuclear and space industries and restricted the sale of hi-tech products to Russia.

Broader sanctions against whole sectors of the Russian economy, including its main staple, oil and gas, have been threatened, but not implemented. Skeptics said such sanctions would backfire against the EU, Russia's leading trade partner which is also heavily reliant on Russian petroleum exports. The ministry's forecast assumes no "sectoral" sanctions will be imposed.

Broad damage has been done, however — the spike in uncertainty has sent the perceived risks of operating in Russia skyrocketing, leading Western banks to shy away from the country, while many companies not already tied into Russia have put investment plans on hold. The value of syndicated loans granted to Russian commodities producers plummeted by 82 percent to $3.5 billion in the first half of this year, Bloomberg reported this week.

Russian economic growth has been sputtering since 2012, and the country entered technical recession in the first half of 2014, according to HSBC, though official statistics indicated GDP growth of 1.1 percent between January and May.





 


ALL ABOUT TOWN

Saturday, Oct. 25


AVA Expo, the eighth edition of the event revolving around all things pop, returns to Lenexpo this weekend. Geeks, nerds, dweebs and dorks will have their chance to talk science fiction and explore a variety of international pop culture. Tickets for the event can be purchased on their website at avaexpo.ru.



Sunday, Oct. 26


Zenit St. Petersburg returns home for the first time in nearly a month as they host Mordovia Saransk in a Russian Premier League game. Currently at the top of the league thanks to their undefeated start to the season, the northern club hopes to extend the gap between them and second-place CSKA Moscow and win the title for the first time in three years. Tickets are available at the stadium box office or on the club’s website.



Monday, Oct. 27


Today marks the end of the art exhibit “Neophobia” at the Erarta Museum. Artists Alexey Semichov and Andrei Kuzmin took a neo-modernist approach to represent the array of fears that are ever-present throughout our lives. Tickets are 200 rubles ($4.90).



Tuesday, Oct. 28


The Domina Prestige St. Petersburg hotel plays host to SPIBA’s Marketing and Communications Committee’s round table discussion on “Government Relations Practices in Russia” this morning. The discussion starts at 9:30 a.m. and participation must be confirmed by Oct. 24.



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