Bank of America: Russian economy responds to crisis better than forecast

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 US investment bank JPMorgan Chase said that the Russian economy is responding to Western sanctions related to the conflict in Ukraine better than previously predicted.


According to the largest US investment bank JPMorgan Chase, surveys of business sentiment in Russia "are signaling a not-so-severe recession in the country, and thus showing that the Russian economy is coping with sanctions better than anticipated.


JPMorgan Chase also cited forecast indicators such as electricity consumption and cash flow, showing that the Russian economy is in better shape than previous forecasts.


"The available data do not point to abrupt declines in economic activity, at least for now," the JPMorgan Chase report added.


Therefore, JP Morgan Chase has adjusted its growth forecasts for Russia in a more positive direction. Previously, JPMorgan Chase forecast that Russia's GDP will shrink 35% in the second quarter and 7% in the whole of 2022. However, the largest US investment bank also noted that the impact of current sanctions and in the future will still have certain effects on the Russian economy.


"The impact of sanctions will continue in the near future. The GDP index is therefore likely to continue to decline. However, we believe that a severe crisis as predicted will not be. take place," analysts at JPMorgan Chase said.


In addition, JPMorgan Chase also emphasized that Russia's economy would be in much better shape if Moscow had not launched a special military operation in Ukraine.


Russia has faced unprecedented economic sanctions since it launched its military campaign in Ukraine. Among the measures introduced, the embargoes on oil and related products that the US and the West have had severe consequences on the Russian economy. Oil and gas are the main export products of Russia and provide a large source of foreign currency for the country.


In addition, the West has also excluded Russian banks from the SWIFT international payment system, and this action seriously affected Russia's transactions with foreign countries. And yet, the sanctions on Russian individuals and organizations have caused nearly half of the country's foreign exchange reserves to be frozen abroad. In recent developments, senior European Union officials have revealed that the Union is considering confiscating frozen Russian assets in Europe to pay for Ukraine's reconstruction efforts.

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