Moody’s does not exclude the collapse of the Russian economy by 7% this year

According to the results of this year, the Russian economy may fall immediately by 7% against the backdrop of tough sanctions and their consequences, the international rating agency Moody’s does not exclude.

At the same time, it is predicted that Russian GDP will continue to decline in 2023, Interfax reports.

As, in particular, indicated in Moody’s, “the steady depreciation of the ruble will have serious economic consequences in the form of increased inflation and lower living standards.”

Earlier this week, experts interviewed by Interfax warned that the Russian economy is highly likely to enter a recession this year, and the rate of decline could reach double digits if Western sanctions are extended due to Russia’s military operation in Ukraine.

And today, Moody’s, which has already downgraded the long-term ratings of the Russian Federation on debt obligations in foreign and national currencies by six notches at once – to “B3” from “Baa3”, continued to worsen Russia’s credit rating, Interfax reports.

Recall that on February 21, 2022, Russian President Vladimir Putin signed decrees recognizing the independence of the self-proclaimed Donetsk and Luhansk People’s Republics (DPR and LPR), and on February 24 he made an emergency appeal to the Russians and announced a special military operation in Donbass. In his speech, he stated that “circumstances require decisive action from Russia” and stressed that “Russia will not allow Ukraine to have nuclear weapons.”

In response to Russia’s actions, Western countries (USA, Canada, European Union, Great Britain, Japan) announced new, tougher sanctions against the Russian Federation, including financial and economic ones.

In particular, Russian banks fell under the sanctions, including Sberbank, VTB, Novikombank, FC Otkritie and Sovcombank, and for a number of state-owned companies it was difficult to attract foreign capital.

Later, the EU countries and the United States agreed to disconnect Russian banks that fell under sanctions from the international system of interbank transactions and information exchange SWIFT. In addition, it was decided to freeze the assets of the Bank of Russia, which will create difficulties for its use of international reserves. EU countries also pledged to take steps to limit the sale of citizenship — the so-called “golden passports” that allow wealthy Russians connected to the Russian government to become citizens of EU states and gain access to their financial systems.

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