Publications by topic

Main conclusions

• The world economy is dangerously close to stagnation or recession. The GDP growth rates are declining in both developed and developing countries;
• In most developed and developing countries inflation is taking on dangerous proportions and leads to harsh measures to reduce the price growth;
• The growth of key rates of the US Federal Reserve, the ECB and the Bank of England reduces the purchasing power of national currencies in developing countries;
• The geopolitical tensions around Ukraine and the mutual exchange of sanctions worsen the current state and prospects of the world economy;
• Central banks of developed countries and developing countries are raising key rates to combat inflation, which reduces the growth rate of the world GDP;
• The growth of coronavirus cases in the world, severe government measures in China and several other countries to combat the virus are slowing down business activity worldwide;
• Abnormal weather conditions in key centres of the world economy pose threats to the world GDP growth and world food security;
• The GDP growth rates are declining in the largest economies (the USA and China), which slows down the world GDP growth;
• Due to geopolitical tensions and international sanctions commodity markets have strong volatility.

The Russian economy has been under restrictions since 2014 and over the years it has structurally adapted to them. However, the level of sanctions pressure after February 22, 2022 is unprecedented, private companies have also joined the restrictions.

According to the Yale School of Management, since the beginning of the conflict in Ukraine, 799 large foreign companies have left Russia, 312 have reduced operations, investments, frozen projects, and only 244 continue their activities.

The restrictions imposed will be similar in scale to the structural crisis after the collapse of the USSR. Following our estimates, the decline in Russia's GDP in 2022 will be 9.5% — this is the second deepest recession since 1991, and inflation will exceed 20%.

The scale and variety of the imposed sanctions form a significant uncertainty of economic instability in Russia and other countries:

1. cross-border flows of goods and payments are essentially hindered. This undermines supply chains and leads to a decrease in economic activity, as well as puts pressure on the labor market and inflation;
2. the ability of the Central Bank and the Government to respond to an economic shock and a space for economic policy in the future is limited;
3. investment activity and long-term economic growth potential are suppressed.

We tried to consider the main effects of sanctions on the Russian economy, possiblec channels of instability spreading to the economs of other countires, primarily Kazakhstan.

Main conclusions

• Russia is better prepared for sanctions today;
• Pressure on the ruble is low due to the limited demand;
• The ruble exchange rate will be determined by fiscal needs;
• The scale of the crisis in Russia will be determined by the depth of export restrictions;
• The world will face the  price shocks on the energy and food markets;
• Central Asian countries will suffer from disruption of supply chains and a decrease in transfers from the Russian Federation;
• Significant risks are emerging in the food market for Kazakhstan.