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.
According to her comments, which were made public by the department, “lost investment, including hundreds of private sector enterprises that have left the country and are unlikely to return, and limits on Russia’s real economy will impose a drag on Russia’s economic prospects for years to come.”
Valdis Dombrovskis, executive vice president and trade commissioner of the European Commission, and Paolo Gentiloni, the European commissioner for the economy, met with the Treasury secretary.
The Economist Intelligence Unit predicts a 6.2% decline in Russia’s gross domestic product this year and a 4.1% decline in 2023. According to the unit’s worldwide forecasting director, Agathe Demarais, the estimates are “large by both historical and international standards.”
A European oil embargo on Russia, according to the EIU, will severely harm the country’s economy. According to reports, the energy industry accounts for nearly a third of Russia’s GDP, including 60% of exports and 50% of all fiscal income.
At the IMF meetings this week, Yellen and Deputy Treasury Secretary Wally Adeyemo are advocating the G-7’s strategic price restriction 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 said, “At the same time, we have given Ukraine historic levels of economic and military support, and we are watching the military superiority this widening gap is providing on the battlefield.”