As Crimean leaders move forward with their all-but-certain plans to join Russia, the fallout could ultimately affect economic growth, trade, investment and energy supplies.
Sanctions: Western powers may move as early as Monday to impose sanctions against leading Russians.
Europe and the U.S. would probably limit restrictions initially to travel bans and asset freezes on select individuals close to Russian President Vladimir Putin. Russia has said it will retaliate in kind.
The focus on individuals, rather than Russian companies or trade, reflects concern that a new Cold War could hurt the region’s fragile economic recovery.
Russia’s economy: While sanctions would hurt both sides, Russia would suffer much more than the West, analysts say. The European Union’s exports to Russia account for 1% of EU gross domestic product. Russian exports to the EU are worth nearly 15% of Russian GDP.
Former Russian Finance Minister Alexei Kudrin, now an economic adviser to Putin, said even limited sanctions would hit foreign and domestic investment in Russia. Western banks are already shutting off credit lines. Kudrin was quoted by Russian media saying the economy may not grow at all this year as a consequence of the current tension.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.