What would be the impact of sanctions on Russian economy

An energy embargo would have the most serious consequences, as it is estimated that Russia’s gross domestic product would fall by almost 3% if all gas imports and exports were stopped.

As the conflict between Russia and Ukraine intensifies and the Russian army arrives in Kiev in the midst of an emerging humanitarian crisis, several countries and institutions, especially Western ones, have announced sanctions against Moscow.

After a summit of its leaders, the European Union has announced a tightening of sanctions  against Russia in the energy, finance and transport sectors, while those of the United States are directed against Russian banks, elites and commerce, as reported President Joe Biden. The UK has also imposed a series of sanctions against the banking sector, technology imports and Russian businessmen.

Simulations  from the Kiel  Institute for the World Economy (IfW Kiel) offer an overview of the impact Western sanctions could have on the Russian economy depending on the sectors they target.

According to these calculations, an energy embargo would have the most serious consequences, since it is estimated that Russia’s gross domestic product would fall by almost 3% if all gas imports and exports were stopped. An oil embargo, on the other hand, would cause a 1.2% drop in GDP.

To make these estimates, the analysts simulated “a complete cessation of all imports and exports for each category of products by the Western allies.” While the consequences of an oil and gas embargo could be painful for Russia, economists see only limited damage for the EU. “Our calculations are given as an example, but they clearly show that the medium-term economic consequences of trade embargoes would affect Russia much more than its Western allies,” explains Hendrik Mahlkow, researcher at IfW Kiel.

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