Los Angeles, CA -Russia is currently experiencing a slowdown in economic growth, and the situation is most likely to deteriorate further as a result of the newly imposed sanctions, according to a new country analysis report issued by The Atradius Group, the Netherlands-based global risk management firm.
Atradius is observing an impact across all sectors in the form of decreasing domestic demand, a weaker ruble exchange rate, a rise in inflation, limited access to external financing and international capital outflow.
Exporters to Russia “could experience an increase in payment delays and defaults with some sectors expected to be more affected than others,” the report said.
Russian sanctions on imports of food and agricultural products “will hit the food sector, in particular the fish, meat and dairy subsectors, with a negative impact on the whole value chain, while sectors dependent on consumer demand, such as the consumer durables and consumer electronics sectors are also expected to see further slowdown,” it said.
In addition, the report said, US and EU sanctions on financing are expected to put a toll on Russian businesses dependent on financing.
The oil and gas industry “is still performing well thanks to high commodity prices, but businesses in other strategic sectors such as metals and mining are suffering, and may not be able to refinance their large debts. While the Russian government is ready to provide financial support, its reserves, though ample, are limited.”
Some sectors, however, such as the pharmaceuticals sector, “are expected to be less impacted and local agricultural production could even benefit from restrictions on food imports,” the report said.
“In case of price controls, however, business profits may be hit with higher costs that cannot be transferred to consumers in such cases,” the report concluded.