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Sanctions knocked 6% off Russian economy in last 4 yrs

Sanctions knocked 6% off Russian economy in last 4 yrs

Mubasher: Sanctions against Moscow have knocked as much as 6% off the Russian economy over the past four years and the impact is not likely to fade anytime soon.

Russian economy is more than 10% smaller than what might have been expected by the end of 2013, a study by Bloomberg Economics found.

While some of the blame fell on the plunging oil prices, wave after wave of sanctions imposed by the US and European Union (EU) over the Crimea crisis, were the main catalyst.

“The underperformance has been much bigger than crude alone can explain,” wrote Scott Johnson, London-based Bloomberg Economics analyst said, adding that “part of the gap is likely to reflect the enduring impact of sanctions both imposed and threatened over the last five years.”

Analysts relied on growth projection which might have sounded reasonable at the end of 2013, while the study takes into account structural constraints, not sanctions or the slump in oil prices.

Part of the 6% gap could be ascribed to other factors such as the introduction of inflation targeting and a sell-off in the emerging markets.