The latest Western sanctions on Russia will hit its economy hard through tighter financial conditions and reduced trade, and might plausibly hit GDP by 1-2%-pts. But sanctions stopped short of the more damaging scenario – both for Russia and Europe – in which Russia’s energy exports are targeted. For most countries, the main economic impact of the crisis will come through higher commodity prices and the impact on inflation, which in Europe could rise by as much as 2%-pts.
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