The crisis in Ukraine that began months ago has not been resolved, in fact it has worsened. After the plane crash in Malaysia, the heads of government in Europe have also decided to tighten sanctions against Russia.
But what's at stake? What is Russia's weight globally?
The macroeconomic channel
Circa two thirds of the growth world economy of the next two years is to be attributed to Emerging Countries, among which Russia has a significant weight. But, taking into account the current macroeconomic scenario (which foresees an acceleration of the world economy), a slowdown of Russia may not have excessive effects on the maintenance of global growth because:
- Russia accounts for only 3% of world GDP;
- the International Monetary Fund just cut Russian GDP growth to 0,2% in 2014 (and financial analysts are doing the same); even considering the most pessimistic estimates (-1,3%, -0,8% in 2014) we are well above the GDP contraction of 2009 (-7,5%);
The commercial channel
In terms of trade flows (sum of imports and exports) Russia has an important role globally linked to the sector ofthe energy.
However Russia produces and exports gas e Petroleum without managing the distribution chain: in other words, it can turn off the taps of the energy sources (and that's no small thing), but do not directly influencethe cycle of production, storage or distribution of products/services of any kind.
Among the countries most sensitive to the energy issue are primarily the countries of theEastern Europe (Ukraine, Belarus or Lithuania), followed by Germany, Italy and Greece. However, if Russia can put pressure on Europe's energy dependence, it must also deal with the downside: the energy sector it accounts for about one third of tax revenues and two thirds of exports of goods and services of Russia.
The financial channel
Although the specific weight of the financial market is not negligible (70% of GDP), direct exposure of foreign funds is limited. On the other hand, the share of loans raised by Russian companies on international markets is rather significant.
According to estimates Sberbank, the Russian stock market is more developed than the bond market, but remains predominantly under the control of the state or the Russian oligarchy, foreign institutional funds are allowed to hold only 18% of the total share capital.
La financial relationship between the European Union and Russia is important: European banks hold about 75% of total foreign assets in Russia.
Between the most exposed countries are France and Italythrough two major banking groups: Société Générale (for €22 billion) and UniCredit (for €24 billion). According to an analysis by Morgan Stanley[2] this exposure does not put pressure on the profitability of the two banks. However, the indirect effects, linked to the bond that Russia has with the satellite countries of Eastern Europe, are difficult to approximate and cannot be overlooked.
For Russian banks, on the other hand, access to international capital markets is crucial, because about half of the bond issues carried out for raising capital takes place on European markets.
What are the risks for Italian savers?
In a global and interconnected market like the one we live in, it is difficult to precisely identify the effects of Russian isolation from the rest of the world: it seems, however, that every party involved has something to lose. This is a brake on the exasperation of the clash, so one can hope. To date the repercussions of the Russian crisis on the financial markets were rather modest and limited to the Russian equity market.
It is obviously not possible to exclude a further one escalation of the conflict, which remains one of the main risk factors in summer 2014, but it seems reasonable to us to continue attributing low probability with devastating effects on wallets.
