Economist Abramov considers complete economic isolation of Russia unlikely
Russia’s GDP will depend on the strengthening of sanctions due to the special operation in Ukraine and the effect of previously introduced measures. But the country’s complete economic isolation is unlikely, a candidate of economic sciences, head of a laboratory at the Institute of Applied Economic Research, told Lente.ru. RANEPA Alexander Abramov.
A total blockade of the country’s economy by other states is impossible even theoretically. So the specialist assessed three scenarios for the impact of sanctions on the Russian economy, which was compiled by Heli Simola, Senior Economist at the Institute for Transition Economies of the Bank of Finland.
“Today, isolation is countries that account for somewhere around 60 percent of world GDP. 40 percent of world GDP is accounted for by countries that maintain foreign economic relations with Russia, including China, India, Brazil, Iran, and many Latin American countries. The third scenario is unrealistic not in terms of numbers, but in terms of the likelihood of this event,” he said.
According to Heli Simola’s forecast, under the current sanctions restrictions on imports, gross value added in the Russian economy will be reduced almost 4 percent. In the event of a complete ban by developed countries, GDP will fall by 10 percent, and with a complete halt, by 18 percent.
As for exports, their reduction in a similar development of events will reduce Russia’s GDP by 1, 12 and 25 percent, respectively.
According to Alexander Abramov, the probability of a drop in value added by a quarter is 0.001 percent.
“It seems to me that a realistic scenario is about 8-8.5 percent, the figure on which converge and The World Bankand Ministry of Economic Development of Russia today. In reality, this may be a little even less, because the price of oil is high, the fall may be at the level of 4-5 percent. This is a very realistic scenario, although a bit optimistic. This is possible if the sanctions remain at the current level,” the economist said.
5 percent is a realistic scenario. If the European Union deepens this confrontation and strives for an even greater reduction in oil and gas supplies, then it will be in the region of 8-8.5 percent
The specialist noted that the main issue of strengthening restrictive measures against Moscow is whether Western countries will decide to impose a complete embargo on the supply of Russian hydrocarbons.
“The main uncertainty lies in how far the evolution of sanctions will move in this direction. As for others, it seems to me that the developed countries have not so many reserves left. Sanctions are insidious in that they are delayed. For Russia, the previously imposed sanctions will begin to worsen due to the lack of imports of spare parts, components, and so on. Right now, industry is largely working on old stocks, but will industry be able to carry out import substitution of vital industries in such a short time – mechanical engineering, the chemical industry, and even the military-industrial complex (DIC)? This is a big risk, and it is biased towards how much the consequences of already adopted sanctions will be aggravated, ”the specialist concluded.
Former speaker State Duma Viacheslav Volodin announcedthat the lower house of parliament will consider initiatives to protect citizens and the economy of Russia in the face of sanctions during the spring session.