Economic cost of Crimea seizure mounts for Russia

The economic impact of annexing Crimea from Ukraine could drive Russia into a sharp recession this year even if the West stops short of trade sanctions, the World Bank warned on Wednesday.

A World Bank report on the Russian economy, compiled before the most recent evidence of the scale of capital flight, made clear Moscow was already set to pay a significant price in lost growth due to the most serious East-West confrontation since the end of the Cold War.

Gross domestic product (GDP) could contract by as much as 1.8 percent in 2014 if the crisis persists, it said. That high-risk forecast assumes that the international community would still refrain from trade sanctions.

"An intensification of political tension could lead to heightened uncertainties around economic sanctions and would further depress confidence and investment activities," the World Bank said.

"We assume that political risks will be prominent in the short-term."

Under a low-risk scenario, assuming only a short-lived impact from the crisis, GDP could grow by 1.1 percent, just half the bank's 2.2-percent growth forecast published in December.

Russian markets and the rouble have been shaken, resulting in massive capital outflows, now estimated by the Economy Ministry at up to $70 billion in the first quarter alone compared with $63 billion in the whole of last year.

However, Russian stocks clawed back more ground on Wednesday and the rouble strengthened as a relief rally continued due to signs of an easing of tensions over the Crimea crisis.

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So, in the end, Russia will lose a lot of money to gain something they already had. I wonder if putin's political ratings will still be so high if the economy shrinks by 1.8%.

So they joins the west in having a bad economy, probably start printing free money to cover up how bad things are.

I don't think Putin cares.

not sure if serious

Well, it is to be expected that the Russian economy will be affected by such a political and military "venture". However, I don't think that the adverse effects would be significant and persistent. The west had to do something to go along the denunciation and outrage or else it would be accused of softness and impotence. And I don't think that said effects would be significant or persistent because I don't believe its in the best interest of the west and the world in general to completely isolate a state with the economy, political influence and military power such as Russia's in fear it might go completely rogue and start fucking things up for real. Putin probably knows it which is why he was willing to make such a move in the first place. Besides, I'm not sure undermining the Russian economy would hurt Putin's political rating within Russia. If anything, it might increase it further by virtue of populism. The west is still unable to conceive how different and distinct other parts of the world are in comparison to itself which is essentially why the great majority of western foreign policy, especially that of the U.S, is a failure.

"the great majority of western foreign policy, especially that of the U.S, is a failure". You see such stupidity and you have to wonder. If the "great majority" of the US foreign policy is a failure then who has a successful foreign policy?

Well, the US and EU are already preparing much harsher sanctions should Russia also decide to "protect" ethnic Russians in Eastern Ukraine. The fact is that Russia has already isolated itself with this move, I mean who supported them other than the fine democracies of North Korea, Syria and Venezuela? Russia is an economic and military midget in comparison to NATO, if it wasn't for the fact that they had nukes I doubt Russia would be taken nearly as serious as they are now. I also fail to understand why his political rating would increase by virtue of populism? Putin isn't even a populist, in fact Putin said that he considered populists everyone who was not doing anything but making promises.

Apparently some people don't seem to understand what the concept of foreign policy encompasses.

It's basically what the US is doing right now with it's $65 billion printed a month, UK is doing it as well as several other countries.

yeah, no.

I keep my eyes open unlike some idiots.

QE=FED printed around a extra $3 Trillion to buy it's own bonds to stimulate the economy, but what happens when you print far to much little tip we're already seeing it with the 19% increase in food prices already this year.

Years of MEH to awful economic reports, 110 million out of work not just on benefits but have just left the labour force use the old unemployment measurements unemployment is around 15%, multi bubbles like housing and stock markets ready pop again

Listen carefully OT, this guy's post is basically what you get when you have a dude who can look at a bunch of econometrics, but who isn't smart//educated/knowledgeable enough to understand, analyze and/or contextualize them. The idea that food prices are rising so rapidly because of QE is complete bullshit, most experts attribute the cause of that to global supply side issues. He also doesn't understand that U6 (the only one that gives >10% rate) is not the "old unemployment measurement", or that labour force participation and employment would be even lower without QE.

It's always amusing seeing you call people out on their bs, especially when they have 0 knowledge of what they're talking about.