Currency Analyst since 2010

Russia is under threat of recession

Banks warned Russia’s economy is at risk of shrinking as the world’s leading industrial powers – US, European Union and Canada – threaten further sanctions to deter it from invading other parts of Ukraine after the annexation of Crimea.

According to a report by Russian state-owned bank VTB Capital, the country’s economy will shrink over the next 2 quarters as uncertainty hurts domestic spending, hits markets, and puts a damper on foreign investment. The bank lowered outlook for economic growth in Russia to 0% for this year, and say the world’s 9th largest economy could shrink further if sanctions worsen or uncertainty remains high.

In January-March the capital flight from Russia is estimated at $65-70 billion. The largest Russian bank, state-owned Sberbank, said on Monday that Russian economic growth will likely evaporate if capital outflows reach $100 billion. 

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