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Russia's GDP would contract by 15% this year and another 3% in 2023 as a result of sanctions, according to a study by the Institute of International Finance (IIF), a worldwide banking trade organization.
The IIF said in its assessment that the Russian economy following its invasion of Ukraine did not foresee a truce in the war and that sanctions would likely be broadened in the coming months.
The United States, Europe, and other allies have slapped broad sanctions aimed at punishing Russia and limiting Moscow's ability to fund its military machine.
While Russia's economy is weakening and its people's purchasing power is decreasing, a jump in oil and gas prices – the main Russian exports – has pushed the country's current account surplus to record levels in recent months, Reuters stated.
According to the IIF, Russian gross fixed capital formation would fall by 25% in 2022, while imports will fall by 28% and exports will fall by 25%.
Nonetheless, the finance center said that the sanctions "are unraveling its economy, wiping out more than a decade of economic growth, and some of the most meaningful consequences have yet to be felt.”
Picture Credits: Reuters
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