Banca March| Russia has announced a windfall tax on its large companies as a method of financing the war. Putin’s government announced a bill to levy a one-off 10% windfall profits tax on large Russian companies, the country’s Finance Ministry said on Tuesday. It targets companies that annually generated more than 1 billion roubles, or $11.9 million, in profits from 2021, according to the announcement. The new levy could raise…
Alicia García herrero (Natixis) | During the past fifteen months after the outbreak of the Ukraine war, China and Russia’s trade value increased by 36.5% compared to pre-war levels, showing their much-enhanced ties in merchandise trade. Meanwhile, in addition to the upswing of the headline amount, some new patterns in their trade structure are also worth watching. For example, Russia has moved up rapidly in the rank of China’s external…
European Views | The conflict between Russia and Ukraine continues and so do the global gas supply issues. Iran hopes to step in and become Europe’s main gas provider replacing Russian gas export. Iran to Offer Alternative to Russian Gas Export in Europe Being the second-largest gas reserves globally, Iran has 34 trillion cubic metres of natural gas. It’s nearly 17% of the world’s total reserves. Some believe that Iran…
Good news? In Russia, JP Morgan claims to have processed interest payments on two of the country’s sovereign issues, raising expectations of default on its debt for the first time since 1998. This has not prevented Standard & Poor’s from downgrading the country’s credit rating by one notch to CC, just two notches above default, in its belief that the country’s debt is “highly vulnerable to default”. In China, according…
Alicia García Herrero (Natixis) | The unprecedented sanctions imposed on Russia in the wake of its invasion of Ukraine are likely to have devastating consequences. But this will depend on whether Russia manages to bypass the sanctions or, at the very least, mitigate them. One important consideration to answer this question is China’s potential role in offering a helping hand to the Russian economy. China’s economic size and financial clout,…
According to data from the agricultural organization Asaja, Spain annually imports almost 30% of the corn it needs from Ukraine. “The Spanish agricultural sector will undoubtedly be one of the victims. Our imports of cereals and sunflower, as well as basic means of production such as manure and fertilizers, will be seriously affected, which will imply a new increase in production costs for the sector”, the association pointed out. In…
Luis Alcaide | Early morning of 26 February 2022. Invasion of Russian troops. I don’t know whether I’m in Madrid or in the Bucharest of that morning on 21 August 1968. At that time, 170,000 Warsaw Pact soldiers were invading Czechoslovakia, and the Prague Spring was a political and economic threat to the communist bloc. Czechoslovakia, which was a developed pre-World War II society and economy, offered in 1968 economic…
J.P. Marín-Arrese | Ever since the Soviet Union collapsed, the US has shown utter disdain for Russia. It flouted the pledge made to Gorbatchev to keep former Warsaw Pact countries out of NATO so that Russia could have a security buffer zone along its frontiers. It openly invited the Ukrainian government to disregard the Minsk agreement, which was brokered to ensure that Ukraine would remain neutral. John Kerry, the former…
Alicia García Herrero (Natixis) | Given the delicate situation in Ukraine and the US imposition of sanctions on Russia, followed by the European Union (EU), it seems important to assess how much Russia can rely on China as a trading partner. Although trade between the EU and Russia has lost some steam since Putin’s “Pivoting to the East” announced during his 2021 campaign and the sanctions imposed in 2014 due…
Atradius Research | Using a policy of fiscal austerity and credible inflation targeting, the Russian government has successfully insulated its economy from external shocks, including sanctions. Despite its success, the ‘Fortress’ strategy has also come at a cost: discontent among the population is growing over stagnating economic growth and declining real incomes. If Russia is to raise its income level, more robust reforms are needed to overcome structural impediments to…