The Russian economy could take a decade to recover from the crushing sanctions imposed on the country following its invasion of Ukraine, according to a senior banking official.
A return to pre-sanctions levels could take nearly 10 years as the country remains cut off from half of its trade, said German Gref, the head of Sberbank, Russia’s biggest bank.
Mr. Gref estimated that countries that severed ties with Russia were responsible for 56% of its exports and 51% of its imports, crippling the economy.
“It’s a threat to 15% of the country’s gross domestic product, the bulk of the economy is under fire,” chief executive Mr Gref said, speaking at Russia’s annual international economic forum. in St. Petersburg.
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Dozens of multinational corporations withdrew from Russia following its invasion of Ukraine in February, while a large group of countries cut off Russia’s access to the international financial network and seized properties, yachts and private jets belonging to allies of President Vladimir Putin. .
The economic isolation imposed on Russia caused the stock market and the rouble to collapse, prices of household goods to soar, and prompted the government to introduce strict capital controls.
Russia’s central bank also raised the interest rate from 9.5% to 20%, before cutting it again in June.
Following the sanctions, and “if we don’t do anything, we may need about a decade to bring the economy back to 2021 levels,” Gref said.
The Chief Executive also called for structural reforms in the Russian economy.
Russia has suffered from the cutting off of its main logistical arteries – Russian ships have been banned from entering European Union ports, while sanctions have closed the airspace over Europe to companies Russian airlines.
According to Mr. Gref, freight shipments have increased sixfold.
In May, Britain announced new sanctions targeting £1.7bn of trade with Russia in a bid to “further weaken Putin’s war machine”.
They include significantly higher tariffs on £1.4bn of imports from Russia and bans on exports to the country worth £250m a year.
The measures, announced by Chancellor Rishi Sunak and Commerce Secretary Anne-Marie Trevelyan, mean the total value of products subject to full or partial sanctions on import or export from the invasion of ukraine is over £4 billion.
The EU has also recently announced plans to suspend purchases of Russian oil and gaswhich is currently raising more than a billion dollars a day for the beleaguered country.
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