Russia’s largest private bank believes the country is losing GDP annually due to sanctions
The largest private bank in Russia estimated that the Russian economy lost 0.5% of GDP due to sanctions. Because of this, the entire positive effect of the actions of the Central Bank has been negated.
As indicated in the report of the chief economist of Alfa Bank, Natalia Orlova, the losses are caused by diminished possibilities in attracting financing from abroad as a direct result of the sanctions on certain companies.
The current US sanctions impose significant restrictions in the provision of financing to Russian banks under sanctions (not more than 14 days) and oil and gas projects (not more than 60 days). European sanctions also impose a ban or restriction on the timing of financing for many Russian companies and banks.
As a result, Orlova writes, Russian companies have not received enough external financing. Since 2013, the last year before the introduction of sanctions, Russia's corporate foreign debt ballooned by almost $200 billion to $459 billion.
On average, sanctions regimes cost countries 1% of their GDP, Orlova writes. According to Alfa Bank, this means that Russia's losses from sanctions are lower than most.
However, the consequences of sanctions have negated the positive effect of the Bank of Russia policy on price stabilization. The effect of the Central Bank's policy is approximately equal to the consequences of imposed sanctions, Orlova said.
This is not the only assessment of the harm from sanctions for the Russian economy. For example, in 2016, the Economic Expert Group led by Evsey Gurvich estimated the losses from sanctions and the fall in oil prices for 2014-2017 at $600 billion. According to their report, the effect of sanctions was deeper because of the fall in oil prices.
Last September, the United Nations estimated the losses of the Russian economy since 2014 at $55 billion. According to Idriss Jazairy, UN Special Rapporteur, another consequence of the sanctions was the increase in the number of people living below the poverty line.
The IMF published a report in 2015 indicating that the sanctions and counter-sanctions caused the Russian GDP to decline by 1% to 1.5% in real terms. The Ministry of Economic Development of Russia estimated the losses from sanctions in 2014-2015 at 1.5% of GDP.