Pitch·S&P: "Russia Will Face Economic Backlash if It Invades Ukraine"

Gas Pipeline Project Halt, Dollar Transaction Ban and Other Sanctions Warnings
Will Impact Russia's Sovereign Credit Rating

[Image source=Yonhap News]

[Asia Economy Reporter Sim Nayoung] Russia, which is confronting the West over Ukraine, is expected to face economic backlash from international sanctions if it invades Ukraine.

According to foreign media on the 8th (local time), international credit rating agency Fitch stated that if the international community, led by the United States, imposes sanctions on Russia, Russia's sovereign credit rating and financial sector could be impacted. Fitch explained, "The baseline scenario was that new sanctions would not be severe enough to lead to negative credit rating actions, but this risk has become more apparent in recent weeks."

Recently, Western countries have mentioned measures such as halting the Nord Stream 2 gas pipeline project connecting Russia and Germany, and imposing sanctions on Russian banks and individuals if Russia invades Ukraine.

Fitch said, "Measures that have a greater impact on the sovereign credit rating include blocking Russian banks and companies from dollar transactions or access to international payment systems," and “The biggest impact on the banking sector’s creditworthiness would be if sanctions such as prohibiting dollar transactions impair the foreign currency transaction capabilities of large state-owned banks.”

International credit rating agency Standard & Poor's (S&P) also forecasted, "The level of sanctions currently being considered against Russia is stronger than those applied after Russia's forced annexation of Crimea in 2014," and "The resulting macroeconomic impact on Russia will be more severe."

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