Russian aggression against Ukraine, according to Treasury Secretary Janet Yellen, has hurt the country’s economy and hindered its potential for future growth.
In Washington, D.C., at the annual conference of the International Monetary Fund and the World Bank, Yellen stated on Thursday that “the Russian economy is anticipated to decline this year and the next.”
With the larger objective of denying Russian President Vladimir Putin the funds he needs to finance the conflict, Yellen said that Russia has been cut off from Western capital markets as a result of historic sanctions imposed by the United States, the European Union, and allies against it for its unprovoked invasion of Ukraine.
“Lost investment, including hundreds of private sector enterprises that have left the country and are unlikely to return,” she added in remarks made public by the department, “and limits on Russia’s real economy will impose a drag on Russia’s economic prospects for years to come.”
The European Commission’s executive vice president and trade commissioner Valdis Dombrovskis and Paolo Gentiloni met with each other at the Treasury secretary’s invitation.
The Economist Intelligence Unit predicts that Russia’s gross domestic product would decline 6.2% this year and 4.1% in 2023. Agathe Demarais, the unit’s global forecasting director, told CNBC in September that the estimates are “large by both historical and international standards.”
A European oil boycott on Russia, according to the EIU, will severely harm the country’s economy. According to CNBC, the energy sector accounts for nearly a third of Russia’s GDP, including 60% of exports and 50% of all fiscal receipts.
At the IMF meetings this week, Yellen and Deputy Treasury Secretary Wally Adeyemo are advocating the G-7’s strategic price cap on Russian oil as a practical way to prevent the Kremlin from having the funds to prolong its conflict with Ukraine.
According to Yellen, sanctions have essentially made Russia dependent on “suppliers of last resort like Iran and North Korea for basic military equipment.”
She continued, “At the same time, we have given Ukraine record levels of economic and military assistance, and we are witnessing the military advantage this widening gap is providing on the battlefield.”