Russia’s economy is coping better with Western sanctions related to Ukraine than might be expected, JPMorgan Chase said in a note to clients dated last week and made public on Monday.
According to the largest investment bank in the US, the country’s business sentiment surveys “They are signaling a shallow recession in Russia and therefore imply upside risks to our growth forecasts.” He also cited high-frequency indicators such as electricity consumption and financial flows, which indicate the economy is in better shape than anticipated.
“Therefore, the available data does not point to an abrupt drop in activity, at least for now.” bank analysts say in the note, as quoted by Business Insider.
JPMorgan also reversed its earlier forecasts for a 35% drop in Russian GDP in the second quarter and 7% for all of 2022, now saying the numbers are likely to be much less alarming. However, the bank noted that the impact of current and potential sanctions will be felt, and that the country’s economy would be much better off if Moscow had not launched its military operation in Ukraine.
“We expect that the impact of the sanctions will continue to increase in the coming quarters. The GDP profile, therefore, looks increasingly consistent with a protracted but not very sharp recession. analysts predict, noting that export orders are showing a particular decline.
Russia has faced unprecedented economic constraints since launching a military operation in Ukraine, drawing intense condemnation from the West. The United States, among other measures, has imposed an embargo on Russian oil, one of the country’s main exports, while the EU is currently preparing its sixth package of sanctions and is also considering an oil ban. Russia has been cut off from the SWIFT interbank messaging system, while banks, organizations and individuals have been sanctioned, and assets, including half of the country’s foreign exchange reserves, have been frozen. Russia responded with countermeasures and managed to return the national currency, the ruble, to its pre-conflict level after a historic drop, but there is still much uncertainty among analysts about the future of the economy.
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