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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

Monday, Jan. 26


Feeling stressed by the crisis? The Northwest Coach University at 3 Ulitsa Vostsstanaya is hosting a master class by lifecoach Tatiana Almazova. She will shed light on the coaching process, the usefulness of coaching during times of economic downturn and how coaching can improve your career and business prospects. The event starts at 7 p.m. and admission is free. Pre-register by calling 424 3700.



Discover the State Hermitage Museum's collection of English painting at a lecture by art historian Yelizaveta Renne at the Prince Galitzine Library, 46 Nab. Reki Fontanki. The event starts at 6 p.m. and the lecture will be followed by a concert of arias, songs and duets by English composer Henry Purcell. The event is free of charge.



Tuesday, Jan. 27


Celebrate the 71st anniversary of the end of the Siege of Leningrad on Palace Square with a free concert at 7 p.m. Listen to WWII-era songs and the poetry of Olga Bergholz while you peruse outdoor exhibitions dedicated to life during wartime. The event is capped off by a fireworks display at 9 p.m.



Stop by the Lexica School of Foreign Languages at 73 Ligovsky Prospekt from now until Friday for a free English lesson. The classes start at 7 p.m. and cover all levels, from Beginner to Advanced. Registration by telephone on 7641692 and a desire to improve your skills are the only prerequisites.



Wednesday, Jan. 28



Feel like becoming a publishing mogul? Stop by the Freedom anti-cafe at 7 Ulitsa Kazanskaya today at 8 p.m. where Simferopol, Crimea-based founder and chief editor of the Holst online magazine will talk about creating an internet magaine, including what stories to cover, how find an audience and build a team, where to find inspiration and how to stand out from the crowd. Admission is the normal price of the anti-café — 2 rubles per minute, which includes tea and snacks.



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