Capital fleeing Russian economy

VOA:
Although Russian leaders have downplayed the impact of recent U.S. and European sanctions, analysts say capital has been pouring out of the country as risk-averse investors seek safer returns.

With Russia’s economy barely growing, some warn the country could slip into a recession as international outrage and economic sanctions intensify.

Russia is the world’s ninth largest economy and last year it expanded by a tepid 1.3 percent. But this year, Russia’s economy will be lucky to grow at all. Russian stocks have tumbled nearly 14 percent this year, the ruble has fallen 11 percent against the dollar, and inflation is likely to top 7 percent in March.

The economic weakness combined with the threat of more sanctions was enough to prompt the Standard and Poor's ratings agency to revise its outlook from "stable" to "negative." "The poor investment climate and investor sentiment has already extracted a price," said John Chambers, chairman of S&P’s sovereign ratings committee, "and that contributed to our lowering our growth forecast for this year and next and assigning the negative outlook because we didn’t think the risks to the rating were any longer balanced." 
Investors have pulled about $70 billion from Russia’s economy since the crisis began. German Gref, the head of Russia’s state-owned Sberbank, warns the country could slip into recession if the trend continues.
...
I think this is more worry about the fear of future sanctions than the reality of the current sanctions regime.  In other words the markets are punishing Russia more than Obama has to date.  If the US would start to ship LNG to Europe it would have a much greater impact as the government would lose a revenue stream that supports its aggression.

Comments

Popular posts from this blog

Should Republicans go ahead and add Supreme Court Justices to head off Democrats

29 % of companies say they are unlikely to keep insurance after Obamacare

Bin Laden's concern about Zarqawi's remains