Effects of external shocks on Russian economy

Abstract

Russia is integrated with the global economy through trade and financial linkages, making it vulnerable to external shocks. To gain perspective on the importance of various external factors, we present a brief description of Russia’s foreign economic relations and review the recent literature on the effects of foreign shocks on the Russian economy. We examine the impacts on Russian GDP from oil price, foreign output and interest-rate shocks and Western sanctions, as well as exchange-rate pass-through to Russian consumer price inflation. Our review shows that external shocks are important for Russian economic fluctuations. In quantitative terms, the estimates on long-term impacts of different external shocks vary from 0.1 % to 2 % of Russian GDP.