How are the US and European economies affected by sanctions against Russia?

The Russian economy has been devastated by Western sanctions. But the US Treasury Secretary acknowledged that the US and Europe are not immune to the effects of the move.

According to CNN, US Treasury Secretary Janet Yellen said the US and its allies were considering additional sanctions against Russia for its "brutal acts" in Ukraine, even if existing sanctions have already been imposed. dealt a blow to the country's economy.

"The Russian economy is devastated by what we've done. But we will continue to consider possible next actions," Yellen said at a Washington Post Live event.

"We continue to work very closely with our allies to consider sanctions," she said. The US Treasury secretary pointed to the economic and financial damage to Russia due to Western sanctions in recent weeks.

Additional sanctions

"We have isolated Russia financially. The ruble is in free fall. The Russian stock market is closed. Russia is effectively excluded from the international financial system," she asserted.

However, Yellen acknowledged that Europe and the United States were "certainly" also economically affected by the sanctions, although officials have acted to mitigate this. "Global oil prices have been pushed up," the US Treasury Secretary commented.

The Russia-Ukraine conflict and Western sanctions on Russia's economy have pushed world oil prices to record highs. On March 8, US President Joe Biden announced that he would ban the import of oil and other energy products from Russia.

"The war in Ukraine has caused major disruptions to export supplies of energy, metals and agricultural products from both countries, driving prices up sharply. This will create a huge jump in inflation. globally," financial expert Jeffrey Halley (based in Singapore) commented to Zing. According to him, the outlook for global economic growth is also sharply reduced by the impact of the conflict.

Global freight rates for tankers have risen to a decade-long record. Premiums in areas affected by the skirmish also spiked by as much as 5%.

According to Windward data, that means the cost of each train increases by hundreds of thousands of dollars. All of this makes the global supply chain even more stressful. Over the past two years, the pandemic has caused the global transportation system to wobble, causing supply shortages.

"The conflict in Ukraine will continue to push inflationary pressures to uncomfortable levels for central banks around the world. Rising inflation risks, many countries could fall into recession sooner than anticipated. ants", financial expert Edward Moya at consulting firm Oanda (based in the US) commented to Zing.

According to him, the conflict between Russia and Ukraine has caused energy prices to skyrocket by more than 50% above normal levels. That would cripple many economies.

European countries, which depend on Russian energy, are facing their third recession in two years. European consumer spending and investment are both well below pre-pandemic levels, according to ECB data. 

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