The Ukrainian-Russian war is raging, the Russian economy was hit hard on Thursday (3rd) by European and American sanctions, and the stock and foreign exchange markets collapsed. As 7 Russian banks can no longer use the SWIFT cross-border payment system next Saturday (12th), Wall Street analysis Shi predicts that destroying the Russian economy may work, Western countries will make Russia feel the pain, the economy may be even worse in the future, and the whole country will bear the huge price of aggression.
A Russian Financial Crisis Worse Than 1998 Hits
Anders Aslund, a Swedish economist and senior fellow at the Atlantic Council think tank in Washington, pointed out that Western sanctions have effectively destroyed Russia’s finances, and the situation may be worse than the 1998 Russian financial crisis.
Aslund pointed out that because the current situation is not good, all Russian assets have been destroyed, and they are unlikely to return to the market unless profound reforms are carried out.
Clemens Grafe, chief Russia economist at Goldman Sachs, said that while the Russian central bank could rely on its foreign exchange reserves to smooth out any temporary fluctuations in the rouble, it could no longer do so, making it more difficult to limit fluctuations in the ruble without sufficient reserves. , the ruble has been relentlessly sold off, which has implications for both inflation and interest rates.
Liam Peach, emerging markets economist at Capital Economics, pointed out that the gradual tightening of Western sanctions, coupled with the prospect of tightening financial conditions and a banking crisis, means that the Russian economy may experience a sharp contraction this year, and in terms of international sanctions, the worst-case scenario It is countries that restrict Russia’s exports of oil and gas, which account for about half of all Russian goods exports and a third of the country’s government revenue.
Ultimately, the extent of Russia’s recession depends on exports to China, said Steven Bell, chief economist at BMO Global Asset Management. Russia is currently facing a severe financial crisis, and China’s role in Moscow has changed due to its demand for raw materials and energy. become increasingly important.
Bell mentioned that Russia has also converted a large part of its foreign exchange reserves into yuan, and the payment system has turned to Chinese banks, judging that China may hold the key to Russia’s maintenance of war power.
Russia’s credit rating has been cut one after another. Investment banks predict that Russia’s GDP will decline by 7% this year.
Europe and the United States and other countries announced sanctions on the Russian central bank, expel some Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system, resulting in almost depletion of the liquidity of Russian ruble assets. The Russian central bank urgently raised interest rates to 20% and ordered companies to sell 80% Although the Moscow stock market continues to suspend trading, the market value of Russian stocks traded in global markets has rapidly evaporated and the losses are staggering.
Russia’s largest bank Sberbank on Wednesday announced its own withdrawal from European markets, and its London-listed shares plunged 95% to $0.1 on Wednesday, followed by the London Stock Exchange’s announcement on Thursday to suspend trading of 27 companies closely linked to Russia, including Sberbank.
The three major credit rating agencies have successively cut Russia’s credit rating to junk status. S&P Global downgraded Russia’s sovereign credit rating from “BB+” to “CCC-” on Thursday, further falling into junk-level territory.
JPMorgan Chase (JPM-US) forecast on Thursday that Russia’s economic growth will shrink by 35% in the second quarter and 7% this year, while Goldman Sachs forecasts that Russia’s GDP will shrink by 7% this year, and US Treasury Secretary Janet Yellen (Janet Yellen) Recently, he said that the current financial sanctions are having an impact, and Russia is becoming more and more like an economic island, as evidenced by the collapse of the ruble.