impact-of-ukraine-crisis-on-russian-economy-industry
Published

August 2016

Impact of Ukraine crisis on Russian Economy: What does the future hold for Russia What will be the impact of the sanctions on the Russian economy

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Russian annexation of Crimea and its further involvement with the Pro-Russian separatists in Ukraines civil war has irked the major powers namely US, UK, France and Germany. This crisis which has been brewing for over a year now escalated with the impeachment of Ukrainian President Viktor Yanukovich in an overnight legislation which has been labeled by Russia as nothing short of a coup by the opposition. The eastern part of Ukraine which is a major industrial hub but dominated by people who associate themselves more with Russia than Ukraine declared themselves independent and proclaimed themselves a Republic.    

With the Ukrainian army launching a major offensive after suffering setbacks initially with its operations in removing the armed militia from the eastern region, has now begun to gain ground and are closing in on the Donetsk region which is the headquarters of the armed rebellion brewing in Ukraine. Russia has tried to mediate several attempts to negotiate a peace with the western powers and Ukraine but to no avail has suffered from several sanctions from visas being denied to several key members closely associated with President Putin and to major one being sanctions levied on its banks, oil and gas firms which contribute massive revenues to the Russian economy.    

The bulk of the major sanctions came after the downing of the Malaysian airlines flight (MH-370) carrying 298 passengers over the Donetsk region. The verbal sparring over who shot down the flight aside the European countries who were on the fence as Russia is their major trading partner firmly put their support behind the sanctions levied by the United States. The Russian stock market, Rouble and Russias GDP growth have been hit hard and have been sliding downwards eversince since.

The European Union is the most important investor in Russia. It is estimated that up to 75% of foreign direct investment and investment in Russian stocks comes from EU member states. EU exports to Russia are dominated by machinery and Transport equipment, Chemicals, Medicines and agricultural products. This report will provide a detailed analysis of the sanctions and the impact they are supposed to have and the actual impact they will have on the Russian economy and the Economies of the European Union and the United States. What will be the spillover effects on the global economy as Russia is a major exporter of oil and gas? Will the European Union which is Russias largest trading partner also suffer the economic consequences of these sanctions? What will happen to the deals signed by Russia with these countries now that the sanctions are in place? With crisis brewing in Iraq, Syria and Ukraine how will the global commodities market in oil and gas react to these events?

   Who will benefit from this report?

1) Oil and Gas companies: Russia has the worlds largest gas reserves and the biggest supplier of gas to Europe. How will Europe cope with these sanctions and how will Russia handle this loss in revenues?  

2)Agriculture: Russia is the worlds fourth largest wheat exporter and a huge importer of agricultural implements and technologies. What can be expected in the market after the sanctions are in place?

3) Manufacturing: Russia is EUs third largest trading partner and it supplies Russia with advanced machinery and transport equipment. What will happen to the industries manufacturing these products?

4) Defense: Germany, France and UK export defense equipment to Russia from battleships to advanced defense technologies. Will these commitments be honored and how will it affect the Iran nuclear talks?

5) Institutional investors ,Private Equity firms ,Traders: With MICEX at the height of its volatility and the Rouble in free-fall to the dollar. What can be expected from the Russian markets in the next year? How will it affect the level of investments in Russia?

Who will benefit from this report?

  SECTOR/INDUSTRY BENEFITS
  Oil and Gas companies Russia has the worlds largest gas reserves and the biggest supplier of gas to Europe. How will Europe cope with these sanctions and how will Russia handle this loss in revenues?
  Agriculture Russia is the worlds fourth largest wheat exporter and a huge importer of agricultural implements and technologies. What can be expected in the market after the sanctions are in place?
  Manufacturing Russia is EUs third largest trading partner and it supplies Russia with advanced machinery and transport equipment. What will happen to the industries manufacturing these products?
  Defense Germany, France and UK export defense equipment to Russia from battleships to advanced defense technologies. Will these commitments be honored and how will it affect the Iran nuclear talks?
  Institutional investors ,Private Equity firms ,Traders With MICEX at the height of its volatility and the Rouble in free-fall to the dollar. What can be expected from the Russian markets in the next year? How will it affect the level of investments in Russia?
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