Russia's Invasion of Ukraine will Drag its Economy Back to 2007, Finance Experts Say

According to an influential association of finance experts, Vladimir Putin's invasion of Ukraine will wipe out 15 years of economic growth in Russia. The Institute of International Finance, a group of representatives from global finance firms, made the prediction. The Reuters news agency reported it on Wednesday.

The group cited several consequences of the invasion that would be devastating to Russia's finances. It estimated that the damage would reduce the economy's size to that of 2007. The top three were as follows:

Companies are leaving Russia and laying off workers.

Exports have plummeted as a result of sanctions.

Russians with talent are fleeing the country.

According to the group, Russia's economy will contract by 15% in 2022 and another 3% in 2023. It stated that the situation for Russia could worsen depending on how quickly European countries implement their plan to stop consuming Russian oil and gas.

The EU agreed to halt around 90% of Russian oil imports by the end of the year, but natural-gas imports from Russia would take much longer.

Russia is on the verge of a historic debt default as it faces increasing difficulties in repaying its foreign creditors after being cut off from the financial system. Domestic capital controls have bolstered its currency, but with energy demand declining in many parts of the world, it has been forced to offer fuel at steep discounts, particularly crude oil.