About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 1 (December 13, 2022)

handle is hein.crs/govejsn0001 and id is 1 raw text is: Congressional Research Service nformuqin I egislatv debate since 1914 The Economic Impact of Russia Sanctions In response to Russia's 2022 war on Ukraine, a broad, multilateral coalition, including the United States, the European Union (EU), the United Kingdom, Canada, Australia, Japan, and others, imposed sweeping new sanctions on Russia. The sanctions-unprecedented in terms of scope, coordination, and speed-target the overseas wealth and economic activity of Russia's elites and decision makers. The sanctions also target Russia's financial and energy sectors and access to western technology, among other financial and trade tools. The sanctions have created challenges for Russia but to date, have not delivered the economic knock out that many predicted. New sanctions on Russian oil exports implemented in December 2022 may increase economic pressure on the government. Although sanctions are a foreign policy tool deployed in several contexts, the coordinated sanctions on Russia are significant to the global economy due to the size of Russia's economy-before the war, the 1 1th largest in 2021-and Russia's integration in the global economy. In addition to its oil and natural gas exports, Russia has been a key global supplier of several metals (titanium, aluminum, and nickel), chemical gases used in semiconductor production, wheat, and fertilizers, among other commodities. Many U.S. and international firms had also established factories, joint ventures, and retail operations in Russia, and face losses as they exit the Russian market. Impact on Russias Economy Early in the war, the broad consensus was that the new sanctions could devastate the Russian economy. Since the start of the war In February 2022, sanctions have created numerous economic challenges in Russia. For example: * Russia's financial sector faces losses of hundreds of billions of dollars; * the Russian military is having difficulties procuring key components for its war effort; * many Russian factories have suspended production because they cannot access foreign-made parts; * many affected companies are placing employees on part-time schedules or furlough; * hundreds of U.S. and international companies have exited the Russian market; and * Russian oil is selling below market prices. By other metrics, however, the Russian economy has weathered the sanctions better than many expected. In October 2022, the International Monetary Fund (IMF) estimated that in 2022 Russia's economy would contract by 3%, less than half of its economic disruption during the global financial crisis of 2008-2010 (Figure 1). Additionally, IMF forecasts suggest that the 2022 uptick of inflation in Russia, and its decline in imports, will be Updated December 13, 2022 temporary (Figure 1). Russia's oil exports to non-U.S. destinations, largely exempt from sanctions until December 5, 2022, have been an important source of government revenues. Figure I. Economic Trends in Russia Growth, % change in GDP 10 -s -10 2900 2005 01'0 205 2020 - Realized data Forecast made in Oct 2021 Forecast mnade in Oct 2022 Growth, % change in Inflation (yr-end), % change 5 10 0, 5 -5 C - - - r - r 2019 2021 2023 2O19 2021 2023 Unemployment,% Imports, %change volume 8 30 3V -10 ' -2 2019 2021 2023 21 01 22 2019 2_021 2023 Source: Created by CRS from IMF World Economic Outlook Database. There is some evidence that economic conditions in Russia are starting to deteriorate at a faster rate. In November, the Russian central bank estimated a faster economic contraction in Q4 2022 (7.1%) relative to previous quarters in 2022 (around 4%). Sanctions may be a contributing factor-it often takes time for the full effect of sanctions to materialize-but other factors are likely contributing as well. Most notably, the war effort itself-including the mobilization of civilian production for military purposes, workers drafted to military service, and deferred domestic infrastructure projects-has created economic disruptions. The recent expansion of oil-sector sanctions is expected to increase pressure on Russia. In December 2022, the EU banned imports of most Russian crude oil and the G7 implemented a global price cap on Russian oil purchases. These new oil sanctions could reduce government revenues, exacerbating budgetary pressures resulting from higher war expenditures.

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Already a HeinOnline Subscriber?

Log In

profiles profiles most