International Monetary Fund (IMF) Managing Director Kristalina Georgieva (L) and US Treasury Secretary Janet Yellen meet on the Treasury Department in Washington, DC, on July 1, 2021.
Nicholas Kamm | AFP | Getty Images
Treasury Secretary Janet Yellen says Russia’s war against Ukraine has weakened its economy and slowed the nation’s growth prospects for the foreseeable future.
“The Russian economy is projected to contract this yr and the subsequent,” Yellen said Thursday before a gathering with European economic officials on the International Monetary Fund and the World Bank annual meeting in Washington, D.C.
Historic sanctions imposed by the U.S., the European Union and allies against Russia for its unprovoked invasion of Ukraine have cut the nation off from Western capital markets with the larger goal of depriving Russian President Vladimir Putin of the revenue he must finance the war, Yellen said.
“Lost investment, including a whole lot of personal sector corporations which have left the country and are unlikely to return, and constraints on Russia’s real economy will create a drag on Russia’s growth prospects for years to return,” she said in remarks released by the department.
The Treasury secretary hosted a gathering with Valdis Dombrovskis, European Commission executive vp and trade commissioner, and Paolo Gentiloni, the European commissioner for the economy.
Russia’s gross domestic product is predicted to contract 6.2% this yr and 4.1% in 2023, in accordance with the Economist Intelligence Unit. The projections are “huge by each historical and international standards,” Agathe Demarais, the unit’s global forecasting director told CNBC in September.
The EIU also said a European boycott of Russian oil will further deplete the economy. The energy sector makes up a couple of third of the Russia’s GDP, including half of all fiscal revenues and 60% of exports, CNBC reported.
Yellen and Deputy Treasury Secretary Wally Adeyemo are promoting the G-7’s strategic price cap on Russian oil on the IMF meetings this week as an efficient method to disclaim the Kremlin the income to proceed its war against Ukraine.
Sanctions have also effectively rendered Russia depending on “suppliers of last resort like Iran and North Korea for basic military gear,” in accordance with Yellen.
“At the identical time, we now have provided record amounts of each military and economic assistance to Ukraine,” she added “We’re seeing on the battlefield the military edge this growing disparity is creating.”
