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Sanctions hit will see Russia economy contract 20% Q/Q in second quarter

by Mike Robinson

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© Reuters. At the Exhibition of Achievements of National Economy, Moscow (Russia), October 24, 2018, Pigeons rest upon a bas relief. REUTERS/Vasily Fedosenko/Files

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LONDON (Reuters – Russia’s economy expected to shrink by 20% and around 3.5% during the entire year, JPMorgan (NYSE 🙂 stated Monday.

Jahangir Aziz, JPMorgan’s head of international banking said that if these sanctions were imposed, it would have a severe impact on Russia’s economy.

“The two pillars of the economy even in the midst of slowing growth, rising inflation, and high interest rates were the ‘fortress’ FX reserves of CBR and Russia’s current account surplus. It’s not anymore.

JPMorgan has also reduced its trend growth forecast for Russia to 1.0%, from 1.75%. This is because of Russia’s growing economic and political isolation.

Russia is forecast to see inflation of 10% in the year to end with risk heavily tilted to the upside.

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