Sanctions destroy 15 years of economic gains in Russia

The International Monetary Fund (IFF) said in a statement on Wednesday that sanctions imposed on Moscow over the invasion of Ukraine had destroyed 15 years of Russian economic progress and three decades of integration with the West.

Read more: [EN DIRECT] 105th day of war in Ukraine: Here are all the latest developments

However, the impact of these measures is difficult to predict because they are constantly changing, with possible new sanctions on the one hand and a potential response from Russia on the other, especially in the energy sector.

Elena Rybakova, an IIF economist, told a news conference that the war would be costly for Russian President Vladimir Putin, but that sanctions would not act as a “switch flick.”

In its latest analysis, the IIF predicts that the Russian economy will shrink by 15% this year and another 3% by 2023.

Fiscal sanctions – including reducing Moscow’s foreign debt repayment capacity – have pushed up domestic demand and thus “blunted the short-, medium- and long-term economic outlook” by rising inflation and the departure of foreign companies.

The authors of the report note that “some of the most important effects have not yet been realized.”

Elena Ripakova noted that sanctions are disrupting global value chains. He sees it as “30 years of investment and the breakdown of relations with Europe”.

According to IIR Executive Vice President Clay Lowry, evaluating the effectiveness of sanctions imposed on Russia depends on what governments are trying to achieve.

“If you’re hurting the economy with success … these sanctions will definitely have an impact,” he told reporters.

However, in the past, sanctions have certainly not proven effective in changing policies, he said.