WIIW The Vienna Institute for International Economic Studies - Wiener Institut für Internationale Wirtschaftsvergleiche

RUSSIA
The Russian economy is languishing in a prolonged slump. The country was already ‘stuck in transition and stagnation’ before the outbreak of the Ukraine crisis. The current sanctions deter investments, foster capital outflows and boost inflation. Turning inwards and developing import substitution strategies using accumulated domestic resources may prevent an outright recession, but it will not kick-start the requisite modernisation drive. The wiiw baseline scenario – assuming no further escalation of the Ukraine conflict – reckons with a meagre acceleration of GDP growth based on a gradual revival of investment. The above notwithstanding, the conflict over Ukraine will have a lasting impact on trade, investments and integration with Europe.