International sanctions and the cost of a protracted invasion of Russia have led to the contraction of the nation’s economy by 4% in the second quarter as the price of sanctions and the cost of supporting a six-month invasion of Ukraine mount, the New York Times reports.
The drop was more than a seven percentage point swing from the first quarter, for which government officials announced a 3.6% increase, prior to most sanctions having an impact. Western sanctions, put in place in March after the invasion of Ukraine started February 24th.
About half of Russia’s foreign hard currency and gold reserves were frozen in foreign financial institutions, and because of sanctions by more than 30 countries it cannot access around $300 billion held there. That loss of access to cash caused Russia to default on its foreign debt for the first time since 1917.