Supply chain disruptions have already started denting global trade following the stringent sanctions against Russia. This could delay the post Covid 19 pandemic economic recovery process across the world. The Russian economy, analysts estimate, could decline by 7 per cent after registering 2 per cent GDP growth in 2021.
As part of the sanctions announced by the US, UK, Germany and their allies the Russian banks have been disconnected from the SWIFT international payment system leading to choking of Moscow’s financial payment mechanism thereby affecting cross border trade.
Crude oil, refined petroleum, wheat, gold and coal are among Russia’s top exports items. About 40 per cent of Europe’s energy needs are sourced from Russia.
In 2020, Russia exported goods worth $335.5 billion across the globe.
According to Gulf News, since Russia’s invasion of Ukraine, hundreds of tankers and bulk carriers have been diverted away from the Black Sea, while dozens more have been stranded at ports and at sea unable to unload their valuable cargoes.
While the news organization said that only a small handful of Russia’s 2,000 cargo and tanker ships have been sanctioned by Western powers, the freezing of the assets of the country’s biggest banks means the business of importing and exporting from Russia will take a major hit.
Meanwhile Russia has been strengthening its trade relations with China.
Last month Moscow signed up a $117.5 billion 30-year natural gas contract with China but Beijing, after its initial support to Russia after the country attacked Ukraine, is now showing some reluctance in providing full support to the Vladimir Putin administration.
Last week, Beijing based multilateral agency Asian Infrastructure Investment Bank announced suspension of all activities relating to Russia and Belarus.