Study, serious impact of sanctions on Russia, but risk of shocks on raw materials
The sanctions against Russia are having a large impact on its economy, but the imposition of further measures, including those on oil exports, if not mitigated by careful policies to mitigate the cost, could cause a shock to supply and prices of raw materials. This is the analysis contained in a work by Emidio Cocozza and Michele Savini Zangrandi, of the Bank of Italy’s Economy and International Relations service one year after the start of the war in Ukraine, which underlines the difficulty “in finding the right balance in calibrating the measures”.
In reconstructing the impact that the sanctions have had on the Russian economy, the eleventh in the world, the two economists state that “globalization increases the ability to impose economic, financial and technological restrictions on Moscow, but at the same time amplifies its repercussions on the world economy…None of the sanctioning regimes introduced since the post-war period has ever affected a country with an equivalent impact on the world economy and international trade”.
In such a complex framework, there are also “significant uncertainties regarding the effectiveness of sanctions”. And in fact, Cocozza and Savini Zangrandi underline, “in their initial phase, the sanctions did not limit Russia’s ability to continue exporting raw materials: combined with the sharp rise in international prices, this allowed the country to secure a strong trade surplus and the continued inflow of foreign exchange, and the ruble, after an initial weakening, returned to pre-war levels”.