14:47 Aug. 29, 2016
Escalation cut Russia's chances for sanctions being lifted
The recent flare up over Crimea may have just delayed Russia's economic recovery.
After President Vladimir Putin accused Ukraine of plotting terrorist attacks on the Black Sea peninsula this month, the chance that Western countries will scrap economic sanctions against Russia has declined, according to a Bloomberg survey of economists. Of the 21 asked, 52 percent see the European Union beginning to lift its penalties in the next 12 months. That's down from 69 percent in the previous survey. Only 10 percent expect the U.S. to start removing its sanctions, down from 19 percent a month ago.
"Increasing Ukraine tensions will undermine investor confidence, keep EU and U.S. sanctions in place and further put off foreign capital flows, as Putin will not be focused on economic reforms," said Christopher Shiells, a senior analyst at Informa Global Markets. "This will weaken the ruble and force the central bank to adopt a more cautious, hawkish tone."