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Crimean War Costs Could Reach 3 Percent of GDP - Report
4.03.2014 17:34
Crimean War Costs Could Reach 3 Percent of GDP - Report
Photo Credit: http://www.mandrityt.com

A military invasion of Crimea would cost the Russian economy some three percent of GDP, says Vedomosti.

      The transit of natural gas to European consumers worth $30 billion may be disrupted, the business daily quotes an estimate by Bank of America Merrill Lynch.

      In case of a military operation, the EU may block the construction of the South Stream pipeline and switch to other energy sources in a move towards an economic boycott.

      Public spending is bound to go up regardless of whether the Kremlin decided to send the troops to the Crimean peninsula.

      The Russian authorities have pledged financial aid to the residents of the autonomy whose budget is facing a $1 billion deficit.

      According to Vedomosti, Russia’s 2013 GDP totaled 66.689 trillion roubles.

      The events in Ukraine have sent the Russian stock market and national currency in free fall, with the biggest blue chips like Sberbank or Gazprom shrinking by an average of 15-23 percent on Monday.

      The tough international response over Russia’s intentions in Crimea triggered a massive sale of Russian stocks. Throughout the day, the Moscow Stock Exchange suspended trading in the stocks of Mostotrest, FSK UES, Rosseti, MOESK, Kamaz, Mechel, Irkutskenergo after they devalued by more than 20 percent.

      According to the Exchange, the volume on the foreign exchange section broke the $42 billion threshold, double the February average of $22-23 billion. The Central Bank is forced to resort to mass injections to keep the national currency afloat.

      By 4.30 pm Moscow time, a whole raft of Russian giants were hit, including Gazprom (-14.56 percent), VTB (-18.82 percent), Gazprom Neft (-8.71 percent), Lukoil (-10.05 percent), Novatek (-14.42 percent), Norilsk Nickel (-6.19 percent), Polyus Gold (-9.29 percent), Rosneft (-7.62 percent), Rostelecom (-13.89 percent), Sberbank (-17.09 percent), FSK UES (-23.69%). The capitalization of the Russian companies listed on MICEX shrank by 2.1 trillion roubles to total 18.4.

       




Author: Mikhail Vesely

Tags: Russian economy Crimea    

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