Macro Focus - August 2018
New sanctions against Russia

Limited impact on real economy from currently introduced sanctions, although some volatility in financial markets  

  • Recent weakening of the RUB and decline in stock market is probably an overreaction (i.e. not so much about the currently introduced sanctions, but more the fear of additional more drastic measures). Some of the RUB weakness is the spillover from the Turkish lira meltdown and the generally negative sentiment in the emerging markets 
  • Russia still has a good level of external reserves, low debt and good fiscal discipline 
  • At the current levels the ruble is very cheap (consider the price of oil), and given the strength of its other economic fundamentals further depreciation and panic is unlikely 
Larger impact on growth if additional sanctions are implemented (proposed to the Congress, but discussions on that will follow) 

  • The most painful, if implemented, would be sanctions towards Russian major banks 
Retaliation from Russia is probable, but most likely hurting itself 

In any case, recent US actions will make Russia even more opportunistic, isolationist and protectionist, potentially increasing tensions in the region 

  • Even larger political risks for Baltic exporters and less trade opportunities 
  • Risks of interfering into neighbors elections (e.g. Latvia in October)

PDF-Document Read the full analysis/report here (PDF)

For more information please contact 

Lija Strašuna, +371 67445844,

Nerijus Mačiulis, +370 5 2582237,


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