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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, Aug. 2


Gatchina Palace Park Museum will host its second annual Night of Light, an impressive audio-visual show across the night sky. Tickets are 600 rubles ($16).


If graphic design is more your thing then check out Illustration Day, where you will be able to visit an exhibition, attend lectures by professionals and even show experts some of your own work. The event starts at noon at Zona Deystvia, 73 Ligovsky Prospekt. The entrance fee is 350 rubles ($10).



Sunday, Aug. 3


History lovers shouldn’t miss the chance to see reenactments of World War I battles in Pushkin at noon. Besides exciting war scenes, visitors can enjoy live music, historical costumes, an equestrian show and a fancy-dress parade starting from the Moscow gates.


Garage Sale, the popular and growing flea market where nothing is priced over 500 rubles ($14.11), starts today at noon in Loft-Project Etagi, 74 Ligovsky Prospekt. Be sure to get in early to score a bargain. Entry costs 50 rubles ($1.40)



Monday, Aug. 4


Continue the working week with a calm and steady mind with a free yoga lesson at 7 p.m. in the Bukvoyed store at 23A Vladimirsky Prospekt.



Tuesday, Aug. 5


Visit The Romanov Dynasty doll exhibition today, where more than fifty porcelain dolls depicting Russian rulers, and made by Olina Ventzel, will be on show. The exhibition continues through Aug. 31 in Sheremetyev Palace, 34 Fontanka Naberezhnaya.



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