Sanctions imposed on Russia will hurt the country more than the rest of the world
In 2019, CSH scientists published an elaborated model that allows to quantify the effects of an economic shock imposed on one end of the world, for instance on a country or an economic sector, to the rest of the world’s economy.
In their newest Policy Brief, Tobias Reisch and Stefan Thurner (supported by Jan Hurt and Liuhuaying Yang) use this model to explore the impacts of sanctions imposed on Russia due to the Russian-Ukrainian war on the World’s economy.
CSH Policy Brief:
Shocking Russia | How will economic sanctions affect the Russian economy, how will an oil and gas embargo play out, and how are sanction-imposing countries affected on the various industry sectors?
[Here is the link to the German version]
“We use a combination of economic models that allow us to estimate supply and demand shocks of many economies simultaneously,” points out CSH President Stefan Thurner, senior author of the policy brief. “Our extension to classical input-output analysis shows the shock waves started in one place running through the world’s economies and give us a feeling of how strong they play out in a global context,” he explains.
The CSH scientists simulate two scenarios:
- The currently implemented sanctions, and
- a scenario in which the Russian export of fossil fuels comes to an hold due to worldwide bans on Russian oil and gas.
“We find that a far-reaching embargoe will affect Russia far more than other countries,” says first author Tobias, who run the simulations. “With the current sanctions, the Russian economy will decline by 6 percent, if India and China follow, the decline will be 17 percent, according to our calculations.”
If the world agrees on banning Russian oil and gas exports, the country’s economy would go down by another 12 percent.
Countries that would benefit most from a worldwide oil and gas embargo are Saudi Arabia, Norway, the US, and Australia. The Saudi Arabian mining and oil and gas extraction sectors would have a 6.9% increase of output, the same sectors in the US and China would increase by 6.7% and 6.4%, respectively.
Interactive shock calculator
Our visualizing expert Liuhuaying Yang once again produced a beautiful interactiv tool that breaks the figures down to countries and industrial sectors.
(So far, Europe is shown as “one” country; a future version of the tool is planned that will show Europe broken down to single countries.)
In this tool, users can even impose their own sanctions and see how the economy of other countries or sectors is affected.
This is the link to the tool “Sanctions on Russia”.