Russia's economy could shrink by up to 15% this year and face up to 30% inflation due to pressures brought upon it by Moscow's invasion of Ukraine and the international sanctions that has prompted, according to one European think tank.
"Already we are seeing supply chain problems in many sectors because of the sanctions," said Vasily Astrov, economist and Russia expert at the Vienna Institute for International Economic Studies (wiiw).
However, the sanctions will not impinge Russia's ability to wage war on Ukraine in the short-term, according to the study.
"The Russian government still has enough fiscal leeway to be able to finance the war for longer," according to Astrov, who noted that Russia will probably run out of soldiers and modern weapons before it runs out of money.
Ukraine is also suffering economically after weeks of assault. The area under direct attack, including Kyiv, produces about 53% of the country's gross domestic product. Ukraine has also lost about half of its harbours, which it needs to export steel and wheat.
Long-term, the outlook grows dimmer, since many companies are set to shut down, which will lead to widespread unemployment. Banks will also have to prepare themselves for massive losses, since so many assets will be destroyed and debtors will have no means to make repayments.
Should Ukraine end up divided in two after the war, its assumed that the part that remains independent will stage a strong recovery, with many refugees returning to that portion. The free portion would also be able to count on significant reconstruction aid from the EU and America.
