Economists first estimated the losses of Russia from Western sanctions

The Russian economy lost an average of 2 p. p. quarterly growth of GDP because of the sanctions of the West, said in a joint article, research fellow German Institute for economic research DIW Berlin, Konstantin Kholodilin and postdoc at the Free University of Berlin Alexei Nechunaeva. “If we translate this into loss of economic growth over the two years of the sanctions war, the effect is very noticeable,” — said in a paper published last month.pdf). Actual GDP growth from the second quarter of 2014, when the were first imposed the sanctions in the third quarter of 2015 (the latest available in the time series researchers) amounted to minus 4.1 percent, while the counterfactual (as if there were no sanctions) — 6,9%, said RBC Holodilin. The difference of 11% can be considered as the upper limit of the damage caused by sanctions,” he says.

The Holodilin and Netunaev claim that their work is the first attempt to measure the impact of sanctions on Russia’s economic growth. To separate the effect of sanctions is problematic because little data, time series too short, and the imposition of sanctions almost coincided with the beginning of the fall in oil prices.

The authors of the study used for the analysis method of structural vector autoregression. It in 1980 first proposed the American macroeconometric Christopher Sims received the 2011 Nobel prize. For the period from March 2014 to December 2015, the authors calculate the index of intensity of the sanctions (until the end of February 2014 it is equal to zero). The value of the index at each moment of time is determined by the number of sanctions were imposed by Western countries, and scales of these sanctions. The latter, in turn, are determined by the type restriction and shares of countries in trade turnover of Russia. For the analysis we used data of Rosstat, Eurostat, Datastream and Bank for international settlements about the growth of Russia’s GDP and the Eurozone, oil prices and real effective exchange rates.

For the Eurozone economy, the impact of anti-Russian sanctions was negligible, it follows from work Kholodilin and Nechunaeva. The average rate of economic growth in the Euro area declined slightly. One of the explanations economists call the fact that the negative trade balance of the Eurozone with Russia in 2014 decreased by $3.6 billion, which gave a small increase of GDP of the currency bloc.

Previously, Evsey Gurvich and Ilya Prilepsky of the Economic expert group in his article for “Issues of economy” has estimated accumulated GDP losses of Russia from sanctions for the period 2014-2017 in 6 PCT of GDP in 2013, and a net outflow of capital triggered by sanctions, economists have estimated at $160-170 billion in the same period. At the end of 2014, Finance Minister Anton Siluanov said that Russia loses $40 billion a year due to imposed international sanctions — 2% of GDP, and in January 2016, Deputy economic development Minister Alexei Likhachev has estimated the losses of the economy from Western sanctions and retaliatory sanctions Russia to €25 billion in 2015 (it is unclear what calculations were behind these figures).

The first sanctions against Russia were introduced in March 2014. Sensitive for the Russian economy was the impact of financial sanctions — restrictions of foreign borrowing. According to PwC, if the pre-sanctions in 2013, Russian issuers attracted at the expense of Eurobonds of $46.4 billion, in 2014 — only $10.4 billion, and in 2015 — a little over $5 billion, President Vladimir Putin in January 2016 in an interview with German newspaper Bild said that sanctions are “not the most difficult thing we experience, but is also harmful to our economy — access to foreign financial markets”. This spring, Russia has been forced due to sanctions restrictions to postpone indefinitely the return to the external market borrowings.

Counter-sanctions imposed by Russia in response to Western sanctions affected the performance of inflation in the country. According to the results of 2014, the Ministry of economic development estimated that the contribution of counter-sanctions in annual inflation (to 11.4%) was about 1.5 percentage points While food inflation in 2014 was equal to 15.4% and 3.8 p. p. was due to the impact of the sanctions factor.