Arab Today, arab today russia counts economic cost of crimea intervention
Last Updated : GMT 00:26:33
Arab Today, arab today
Arab Today, arab today

Russia counts economic cost of Crimea intervention

Arab Today, arab today

Arab Today, arab today Russia counts economic cost of Crimea intervention

Moscow - AFP

Russia has started counting the cost of seizing Crimea from Ukraine to its already stuttering economy, anxiously hoping that the West will refrain from implementing a second wave of sanctions that would cause even greater damage. Moscow, already excluded from the G8, is planning for at least economic semi-isolation from the world for the next years with President Vladimir Putin this week saying Russia should create its own credit card system. Western sanctions have so far only imposed visa bans and asset freezes on senior officials -- some close to Putin -- but the fear of further action hurting the wider economy is already causing damage with the stock market down 6 percent in March. The most immediate hit has been on capital outflows which are estimated by economists and officials to have surged to $60-70 billion for the first quarter, more than for all of 2013 combined, as investors took fright at the uncertainty. -Knowingly paying the price- Russian Economy Minister Alexei Ulyukayev last week became the first top official to admit the Crimea intervention would badly hit GDP, slashing to ribbons the government's previous 2014 growth estimate of 2.5 percent. He said growth would be a measly 0.6 percent in 2014 if capital flight was around $100 billion for the full year, a figure that some economists see as wildly optimistic given the current trends. The economy would contract by 1.8 percent if capital flight reached $150 billion for the year due to a projected eight percent decline in investment, he added, echoing a prediction by the World Bank. "The key discussion on the market now is whether Russia can maintain a positive growth rate, or will it slide into decline," said economist Natalya Orlova at Alfa Bank. Alexei Kudrin, the long-serving finance minister who resigned in 2011 but is known to retain Putin's trust, said that Russia was knowingly paying a colossal economic cost for a political decision. "We are paying hundreds of millions of dollars for this development of events. If this was the choice that has wide support then we have to understand that it has an economic cost," he said, quoted by the RIA Novosti news agency. - Low growth trap - The risk for Putin is particularly grave as the consequences of the Crimea adventure come at a time when Russia is already struggling with low growth due to its failure to reform an economy held back by dependence on energy exports. "Russia's slowdown is, to a large extent, structural," Standard and Poor's said in a report on the crisis this week. Russia enjoyed stellar rates of growth in the early years of Putin's domination, culminating in 8.5 percent in 2007. Then came the 2008-2009 financial crisis, after which Russia staged an only faltering recovery with growth of just 1.3 percent in 2013. Business daily Vedomosti said that the concern was now that with the political crisis burning, questions of economic reform would be forgotten. "Already it is like reforms are not going to be thought about -- experts have become objects of suspicion, ratings agencies are not trusted and non-traditional investors in other markets are being searched for." Standard and Poor's and Fitch have already both downgraded their outlook on Russia's credit ratings to negative, moves that prompted some officials to suggest Russia needed to create its own ratings organisations. Crucial will be whether the West intends to go further with sanctions on trade or financial markets which would have an immediate negative impact on the Russian economy. This should depend largely on whether Putin decides to go beyond the seizure of Crimea by moving into Russian-speaking regions in the east and south of the country, an act which would cross a new red line with the West. "A move up to more dangerous sanctions is still unlikely unless Russian forces move into another part of Ukraine," said Chris Weafer of Macro Advisory in Moscow. Standard and Poor's said it believed "self interest would prevail" with the EU also wary of the risk of disruption. - The perils of isolation - Russia is not yet close implementing its own version of "autarky", the concept of total economic self sufficiency cut off from the outside economy espoused by regimes from Nazi Germany to North Korea. Economists have warned that cutting Russia off from the Western economy -- an idea sometimes raised by Putin's radical advisor Sergei Glazyev -- would be a disaster for the country and its current leaders. Putin indeed appears keen not to burn the bridges and held a conspicuous meeting on March 26 with the chief executive of Siemens, Joe Kaeser, who promised that the German industrial giant planned long term investment in Russia. "Our integration in the world allows us cheaper investment and supports our growth. If we distance ourselves from the world economy our growth is going to be slower and every percentage of GDP will cost more," said Kudrin.

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today russia counts economic cost of crimea intervention Arab Today, arab today russia counts economic cost of crimea intervention

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today russia counts economic cost of crimea intervention Arab Today, arab today russia counts economic cost of crimea intervention

 



Arab Today, arab today
Arab Today, arab today Youssra depended on colored foam

GMT 16:53 2017 Tuesday ,05 September

Youssra depended on colored foam
Arab Today, arab today Egypt tourism revival steady but slow

GMT 16:04 2017 Tuesday ,19 September

Egypt tourism revival steady but slow
Arab Today, arab today Etiquette expert underlines importance of gifts

GMT 17:52 2017 Sunday ,03 September

Etiquette expert underlines importance of gifts
Arab Today, arab today 600,000 children may flee to Bangladesh

GMT 06:49 2017 Monday ,18 September

600,000 children may flee to Bangladesh
Arab Today, arab today Equifax executives step down

GMT 16:16 2017 Saturday ,16 September

Equifax executives step down
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Ministry seeks to improve education

GMT 14:49 2017 Sunday ,17 September

Ministry seeks to improve education
Arab Today, arab today New Zealand opposition looks

GMT 10:35 2017 Thursday ,14 September

New Zealand opposition looks
Arab Today, arab today 5,000 'Dieselgate' deaths in Europe per year

GMT 19:18 2017 Monday ,18 September

5,000 'Dieselgate' deaths in Europe per year
Arab Today, arab today The history of solar eclipses

GMT 05:16 2017 Sunday ,20 August

The history of solar eclipses
Arab Today, arab today Five trends at the Frankfurt auto show

GMT 12:04 2017 Monday ,18 September

Five trends at the Frankfurt auto show
Arab Today, arab today Renault-Nissan to launch

GMT 10:44 2017 Saturday ,16 September

Renault-Nissan to launch
Arab Today, arab today Eman Al Assy receives three offers

GMT 06:31 2017 Saturday ,16 September

Eman Al Assy receives three offers
Arab Today, arab today 'Severe' Typhoon Doksuri pounds Vietnam

GMT 15:49 2017 Friday ,15 September

'Severe' Typhoon Doksuri pounds Vietnam

GMT 11:10 2017 Friday ,15 September

Fadl Shaker retreats from surrendering himself

GMT 05:05 2017 Tuesday ,12 September

Pregnant woman's suicide roils China

GMT 16:53 2017 Saturday ,02 September

Mai importance of gifts during Eid Al-Adha

GMT 10:25 2017 Thursday ,14 September

Greece fumbled oil spill response

GMT 10:46 2017 Saturday ,05 August

Nanis reveals simple ideas for home renovation

GMT 04:45 2017 Sunday ,17 September

France's hurricane-hit St Martin

GMT 21:57 2017 Sunday ,17 September

Russia and Iraq restore air travel

GMT 17:12 2017 Monday ,07 August

Al-Shawaifi reveals secrets of total solar eclipse

GMT 12:56 2017 Friday ,15 September

Apple's grand plan in Ireland held up by a forest

GMT 11:37 2017 Saturday ,12 August

Fashion designer reveals her new collection
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday