Sanctions, counter-sanctions and Russia : Effects on economy, trade and finance

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Title: Sanctions, counter-sanctions and Russia : Effects on economy, trade and finance
Author: Korhonen, Iikka ; Simola, Heli ; Solanko, Laura
Organization: Bank of Finland
Suomen Pankki
Department / Unit: Institute for Economies in Transition (BOFIT)
Siirtymätalouksien tutkimuslaitos (BOFIT)
Series: BOFIT Policy Brief
ISSN: 2342-205X
Series year: 2018
Series number: 4/2018
Year of publication: 2018
Publication date: 30.5.2018
Pages: 25
Subject (yso): ulkomaankauppa; pakotteet; pääomanliikkeet
Keywords: Bofit-kokoelma; Venäjä;
Other keywords: Russia; economy; sanctions; international trade; capital flows
Abstract: This note briefly reviews the history and current impacts of sanctions on Russian entities imposed by the EU, US and others, as well as Russia’s counter-sanctions imposed on Western countries. A large drop in price of oil in 2014 and 2015 coincided with these measures, complicating our efforts to tease out the specific economic effects of sanctions on the Russian economy. While it is clear that the decline in oil prices had a substantially larger impact on Russian GDP in 2014−2016 than sanctions, the sanctions regime proved effective in restricting access of Russian banks to capital. Looking specifically the impacts on EU countries, we note that the declines in trade with Russia and the EU’s reduced market share in Russia are to some extent continuations of long-term trends. Russia’s counter-sanctions have targeted, among other things, EU food exports to Russia. While the macroeconomic effects Russia’s counter-sanctions on the EU have been marginal, food sector in some EU countries has been affected. Russia’s counter-sanctions have also directly lowered consumption of affected goods in Russia.

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