Russia to be hit harder than West from impact of sanctions on trade
Russia will be hit harder in the long term than the West from the impact of sanctions on global trade, said German think tank the Kiel Institute for World Economy.
According to a model simulation published alongside the Austrian Institute of Economic Research (WIFO), a trade war with the West – US and Europe – would interrupt international supply chains, badly hitting Russia’s growth opportunity.
The model does not include the sanctions imposed by the West in the last few weeks following the Kremlin’s invasion of Ukraine.
“Sanctions usually have an economic but not a political impact in the short term. If they last for a long time and are comprehensive, their political impact can increase,” said WIFO’s director Gabriel Felbermayr.
“The simulation results give an impression of what is at stake for both sides in the long term: After a period of adjustment in world trade, Russia will be significantly weakened, while the damage for the allies is manageable.”
While EU economies would sustain a 0.17 per cent drop in economic output in the long term, Russia losses would be notably more important.
Despite the EU’s dependency on Russian gas, Moscow’s importance for Europe, in terms of imports and exports, is smaller than the one the bloc has in the country.
In 2020, Europe had a 37.3 per cent slice of Russia’s foreign trade pie, while the Russia had only a 4.8 per cent stake in the European foreign market. Even if Russia were to expand its commercial ties with China, it would still be limited.