MOSCOW, July 31 (RIA Novosti) – Stiffer economic penalties on the Russian economy could push it into an early recession by the turn of the year, a senior Russian lawmaker warned Thursday.
“The sanctions are very likely to cause a slump in GDP growth, with a recession looming even before the end of the year,” First Deputy Chairman of Russia’s Federation Council Economic Policy Committee Yuri Shamkov told RIA Novosti.
Shamkov stressed that the EU ban on the nation’s state-owned banks to raise long-term funding in Europe could hit the Russian economy particularly hard.
“This particular measure can deal a serious blow to our economy and consumers, because it will further complicate access to credit-related funds, which has been hard enough due to unscrupulous banking,” Shamkov noted.
The senator said Russia could look for long-term loans in China and other fellow BRICS member states – Brazil, India, and South Africa – although, he added, the third-tier sanctions will eventually hurt the liquidity of assets inside the country.
The lawmaker said a weaker ruble could lower some costs for the Russian economy. “I’d push the ruble lower as this step would increase the liquidity of our funds, give a competitive edge to our producers, expand export markets, boost tax revenues and create more jobs,” Shamkov said.
Earlier today, the European Council announced it had adopted “restrictive measures” against Moscow over Russia’s alleged involvement in the Ukrainian crisis, two days after agreeing on a new set of economic sanctions.
The third round of penalties limited Russian state-owned financial institutions' access to EU capital markets, imposed an embargo on trade in arms, established an export ban for dual-use goods for military end users, and curtailed Russian access to sensitive technologies, particularly in the oil sector.
Moscow has repeatedly said the measures are counterproductive, and warned they will hurt Europe no less than Russia.
The European Union takes more than 45 percent of Russia’s exports, while Russia receives less than 3 percent of EU exports, according to BBC. It also said that “for the first time, the Russians are going to realize that they in fact can live without the global financial services industry.”