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World Bank: stagnation threatens the Russian economy

World Bank: stagnation threatens the Russian economy
Article by: Mariya Shchur
Translated by: Mariya Shcherbinina

On Wednesday Japan imposed additional sanctions on Russia. The new measures prohibit some Russian banks issuing stocks in Japan and increase checks, aiming to prevent arms export to Russia. This way Japan accorded its actions with European and American partners who imposed similar sanctions on Russia earlier. Meanwhile the World Bank stated that the Russian economy is on the brink of stagnation. If the situation unfolds pessimistically, it is possible that economic stagnation is in store for Russia. 

Representative of the Japanese government Yoshihide Suga, when speaking at a press conference in Tokyo, stated Japan was joining the new sanctions against Russia in light of its aggression in Ukraine.

“Taking into account the situation in Ukraine, and the G7 meeting, which will take place during the General Assembly of the United Nations, we decided to reinforce our cooperation with G7 member states,” said the Japanese official.

He also noted that the sanctions may be decreased or abolished should Russia start working on solving the crisis “actively and directly.”

Japan imposed sanctions after Russia’s annex of Crimea in March, however they were softer than the measures employed by the US and the European Union, as Tokyo was hoping to improve economic and energy ties with Moscow.

The lack of definition in Russia’s future threatens its economy – experts

This lack of clarity regarding Russia’s economic and political future is already influencing the economy of the country, the World Bank reports this Wednesday, publishing its report on the Russian economy.

It states that the growth of the Russian economy is less than one percent for the second year in a row, structural reforms are postponed, and business is expectant in light of the geopolitical tensions. This lack of clarity regarding the future course, according to World Bank experts, will become the main problem of the Russian economy throughout the next few years.

Head World Bank economist responsible for Ukraine Bridget Ganzl stated that the sanctions and countersanctions, means to stabilize the economy, high pressure and low domestic demand will all become the main risks in the next two years.

To avoid stagnation, the bank’s economists advise the Russian government to carry out structural reforms aimed to attract investors and a more effective functioning of the market. Also the international economist advise the Russian state to put more effort to develop the economy of their country in a more balanced way, which would include other economic industries besides the energy sector.

Translated by: Mariya Shcherbinina
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