The Foreign Office said Russia’s GDP was expected to shrink between 8.5% and 15% this year as a series of post-war sanctions imposed on Ukraine hit the industry. This would be more serious than in 2009, after the financial crisis, when Russia’s economy shrank by about 7.8%, and it would be the worst decline since GDP declined for several years in the early 1990s. In the long run, experts’ forecasts show that GDP growth will continue to decline as the country is cut off from Western technology, the United Kingdom added, as it announced sanctions on Vladimir Putin’s two adult daughters. Western sanctions on Russia mean that about 60%, or 5 275 billion, of its foreign exchange reserves are currently frozen, the United Kingdom added. This has prevented Moscow from repaying its debt in dollars this week, bringing it closer to default. Russian companies have already reported a significant contraction in business in March, with production and new orders falling and inflationary pressures soaring. With a sharp recession approaching, the Bank of Russia announced a sudden reduction in borrowing costs. The Central Bank of the Russian Federation (CBR) will cut its key lending rate from 20% to 17% from Monday, six weeks after doubling interest rates in an urgent effort to support the ruble. The cut shows that the bank is focusing on supporting the economy, as the recent recovery of the ruble after the introduction of capital controls alleviates inflation concerns. The CBR said inflationary pressures had eased and financial stability risks had stabilized. He also cited the economic cost of sanctions, saying external conditions remained “provocative” and “significantly reduced economic activity”. “Today’s decision reflects a shift in the balance of risks of accelerating consumer prices, declining economic activity and risks to financial stability,” the CBR said, adding that it could cut interest rates again in future policy meetings. The fall in interest rates shows that the CBR is “confident that the most acute phase of the financial crisis is over,” said Liam Peach, a emerging European economist at Capital Economics, and that a major and destabilizing banking crisis had been averted. Peach forecasts further gradual cuts in interest rates this year as the central bank tries to bring inflation back to target. The ruble has recovered from record lows in the first days of the invasion of Ukraine, when it fell to 135 rubles per US dollar. It has now risen again to 80 rubles per dollar, aided by restrictions on remittances and a ban on foreign currency sales. The February rate hike also encouraged Russians to save their rubles by backing the currency. Rising commodity prices since the start of the war have also helped Russia’s finances, with Europe continuing to buy oil and gas to meet its energy needs. However, the freezing of Russia’s foreign exchange reserves means Moscow is approaching its first debt default since 1998. Earlier this week, the United States blocked efforts to pay more than $ 600 million (1 461 million) owed to Russian investors. bonds, resulting in Moscow making payments in rubles. This could be considered a default once a 30-day grace period has expired. Subscribe to the daily Business Today email or follow the Guardian Business on Twitter at @BusinessDesk Several economists have predicted that Russia could shrink to double digits this year. The Institute of International Economics predicted last month that Russia’s economy would shrink by 15%, with the recession eliminating 15 years of economic gains by the end of 2023. Further energy boycotts would severely damage Russia’s ability to import goods and services. deepens the recession. warned. The Platinum and Palladium Market in London announced on Friday that it had suspended two Russian state-owned precious metal refineries from good supply lists with immediate effect. The decision prohibits the two refineries from selling platinum and palladium in the London market, the largest in the world. The price of palladium jumped 8% after the move, due to concerns about supply disruption in the precious metal used in catalytic converters.
