Russia is at increasing risk of a full-blown financial crisis as the West tightens sanctions and Russian meddling in Ukraine pushes the region towards conflagration.
The country’s private companies have been shut out of global capital markets almost entirely since the crisis erupted, causing a serious credit crunch and raising concerns that firms may not be able to refinace debt without Russian state support.
Lars Christensen from Danske Bank said Russia’s economy is already in recession and may contract by as much as 4pc if there are fresh sanctions, risking a repeat of events in 2008 when capital flight set off serial defaults and a banking crisis. “There is a credit squeeze under way and a significant shock to the cost of capital. This could prove to be as bad as the Lehman crisis for Russia. Capital outflows have already been $65bn so far this year, compared to $135bn in late 2008,” he said.
“Markets seem to be betting that the Kremlin can’t let things get worse in Ukraine because it would be insane, yet it is happening it anyway. We think there will be a much more serious correction in the Russian markets,” he said.
-Telegraph.co.uk
-Telegraph.co.uk
