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Thursday, 20 March 2014

Trade Sanctions Spur Global Crash

Mutual economic sanctions could drive world economy to financial crash

The Voice of  Russia

As most of the economies and financial markets are so much interconnected today, the economic pain from the sanctions the West is threatening Russia with, could very well be inflicted to the European Union, in the first place.

Currently, the EU imports one third of its gas from Russia. Russia is also Europe’s biggest customer. The EU accounts for around half of all Russian exports and imports. The overall trade between the two partners stands at around 360 billion euros per year now. Russia’s total exports to the EU stands at around 230 billion euros, while its imports amount to around 130 billion euros. The EU accounts for 75% of all foreign investments in Russia, which makes it the largest investor in the Russian economy.

In its latest press-release, Fitch Ratings agency stated that though it sees a considerable impact on Russia’s economic growth and investment if sanctions are materialized, it’s not clear whether the EU is ready “to risk the potential disruption” to its own economy. For now, the agency sees low growth and low investment for Russia till the current uncertainty over Ukraine is resolved, and given Russia’s robust sovereign credit profile, so far the events do not have implications for the country's 'BBB' rating.

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Could it affect Russia? 


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