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“Russia is on course for an economic collapse that will rival or even eclipse the size of the 1998 slump which followed its debt default, although the financial fallout may be less than then.”
“The currency weakness we see now will inevitably be inflationary, particularly if the economy remains closed off from the rest of the world,” he said. “It is not hard to envision extreme scenarios similar to the post-1998 period in this case.”
Oil and gas revenue has been providing a hard-currency support for Russia because the sale and transport of energy have avoided sanctions as the U.S. and other governments worry such limits would end up hurting their economies more. Russia was running a monthly current-account surplus of about $20 billion at the start of the year.
Bloomberg Economics reckons the blocking of oil and gas exports would mean the economy may contract around 14% this year.