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Countries that resisted Russian sanctions reaped huge benefits. Photo/Reuters
MOSCOW – Countries can benefit by refusing to support Western sanctions against Russia. This was revealed by analysts at the Bank of Canada in a recent study.
In research released last week entitled ‘International Economic Sanctions and the Impact of Third Countries’, experts compared the impact of sanctions on Russia as the target country, as well as the impact on the United States (US), the European Union (EU) and the UK as parties ‘giving penalty’. and large ‘third party’ economies, namely China, India and Turkey.
The calculation is based on three types of sanctions: import-export bans, financial market restrictions and energy embargoes.
According to analysts’ projections, although sanctions will reduce Russia’s economic momentum, their impact depends on whether third countries will join Western countries in implementing restrictions.
Researchers estimate that with the simultaneous implementation of sanctions by Western countries, Russia’s GDP would shrink by about 4% compared to a hypothetical situation without restrictions. However, they claim that if third-party countries implement similar measures, Russia’s GDP will fall by 9%.
Analysts also estimate that the restrictions will cause a decline in the economies of sanctioned countries by 0.8%. However, this impact would be multiplied if third countries did not join the sanctions war.
“On the other hand, third country economies are expected to benefit from rejecting sanctions due to the substitution effect,” claim the researchers, reported by RT.
Restrictions on Russia give them the opportunity to act as alternative suppliers, as well as replace Russian products in the markets of sanctioned countries. This will ultimately result in around 0.4% GDP growth for these countries.
Analysts surveyed by the RBK news agency said the research highlights the importance of economic ties between Russia and its main trading partners – China, India and Turkey. However, some experts also noted that the calculations do not take into account Russia’s import substitution and parallel import mechanisms, which played an important role in allowing the Russian economy to recover from last year’s 2.1% GDP decline.
Russia’s economy is expected to grow by 2.5% by the end of 2023, Finance Minister Anton Siluanov predicted in late August. Western experts have also painted a positive picture for the country, with the World Bank, IMF and Barclays Bank recently raising their estimates of Russia’s GDP amid strong trade and industrial production and higher-than-expected energy revenues.
(ahm)