NEW YORK, (Reuters) – Russia’s economy is expected to contract by 15% in 2022 due to severe sanctions imposed for its invasion of Ukraine. According to an Institute of International Finance analysis, the increase in commodity prices across emerging markets will both be a tailwind and a headwind.

The IIF has reduced its expectation of Russia’s 2022 GDP growth by 18 percentage points. Previously, it had been a 3% estimate.

In a letter signed by several of its economists, the IIF stated that “Further escalation in the war could bring more boycotts Russian energy which would severely impair Russia’s ability to import goods, deepening recession.”

Expect the economic contraction will be two times as severe as that of Russia during the financial crisis.

However, said the note, given Russia’s relatively small economy and its own moves to isolate from global financial markets, the IIF does not expect a broad emerging market contagion.

“Instead we believe that Eastern and Western Europe are going to be hurt by Russia’s exposure to their exports, which is something the markets are just beginning to understand.”

Latin America will be largely unaffected while Africa, Asia and other parts of Asia would experience moderate to severe effects. The impact on the direct environment varies according to whether a country is an exporter or importer of commodity prices.

According to the IIF note, “Latin America can benefit from improved terms of trade between its many commodity exporters,”

“Instead of focusing on Turkey and Egypt, we should consider the possibility that there could be adverse spillovers to Eastern Europe’s trade and commodities imports, as well as higher oil and grain prices.

Notable is Turkey, where oil prices are a major negative for energy importers. The price of a barrel of oil in London has increased from $78 to $114 this year.

“Every $10 rise in oil prices widens Turkey’s current account deficit in 2022 by 0.3 percentage points, raising its dependence on foreign capital inflows at a time when global risk appetite is unsettled,” said the IIF.