IMF sees no ‘rebound’ in Russian economy, warns of further damage if sanctions are extended
By Andrea Shalal
WASHINGTON – The Russian economy will not recover soon from the sweeping sanctions imposed by Western countries for its war in Ukraine, and could suffer further damage if these sanctions are extended to energy exports, the new economist in France said on Tuesday. head of the International Monetary Fund.
Pierre-Olivier Gourinchas, who joined the fund in January, said US and Western sanctions and export bans had put Russia’s economy on a “very different trajectory”, making the type of rebound often seen unlikely. after economic shocks.
“As long as these sanctions are in place – and they could be in place for quite a long time – the Russian economy will follow a very different growth trajectory,” Gourinchas told Reuters in an interview.
“We see this as…something that really hurts the Russian economy in the future and could hurt it even more if the sanctions are tightened,” he said. “The shock is already big enough…and we don’t expect there to be a rebound from the current situation of the Russian economy.”
The IMF on Tuesday slashed its forecast for global economic growth by almost a percentage point, citing Russia’s war in Ukraine and warning that inflation was now a “clear and present danger” for many countries.
He said Russia’s gross domestic product is expected to contract by 8.5% this year, with a further decline of 2.3% expected next year.
Gourinchas told a press conference earlier that Western sanctions targeting Russian energy exports could cause Russia’s economic output to fall by 17% by 2023.
Russia’s economy would effectively be “thrown into autarky” if sanctions were extended to include energy, leaving it with just a few trading partners, he said.
While countries like China and India have not signed on to Western sanctions against Russia, the threat of secondary sanctions still has a chilling effect on their trade with Russia, he said.
“We find that, for example, with a number of Chinese companies – there is a fear of second-tier sanctions, that if you do business with sanctioned entities, you yourself could face sanctions” , did he declare. .
Maintaining sanctions would force India and China to make tough choices going forward, given their need to keep trading with the rest of the world, even if they saw a chance to buy oil and gas Russians at lower prices now.
“It is very important to stay in these (global) supply chains in the future,” he said. “A lot of countries are going to have to ask themselves, where do we want to be in this new emerging landscape?”
Right now, he said, he didn’t expect many countries “to make the choice that their future lies in jumping to the other side.”
Gourinchas said a recovery in the value of the Russian ruble could not mask general indications of the economy, including high inflation figures.
At the same time, it was clear that the Russian monetary authorities had succeeded in using capital controls and rising interest rates to avoid bank runs, the bankruptcy of financial institutions or a “complete financial collapse”.
For now, he said, there are no signs of social unrest triggered by rising energy and food prices in Russia, although the IMF warned that unrest could increase in other parts of the world where prices have risen.