Russia’s economy is set to collapse this year after the United States and its European allies struck the Kremlin with a series of deadly economic sanctions for their unprovoked invasion of Ukraine. Russia’s manufacturing activity fell in March, shrinking at the sharpest pace since May 2020, as companies faced a sharp rise in prices and a sharp drop in new orders. Western sanctions have effectively isolated Russia from the international financial system and prevented it from gaining access to new technology. Experts believe this is just the beginning of a major slide for the Russian economy this year. The Institute for International Finance (IIF), a Washington-based think tank, estimated that Russia’s gross domestic product, the largest measure of goods produced in a country, could sink by 15% in 2022 and 3% in 2023. as a result of sanctions, eliminating decades of growth. A shrinkage of this magnitude would be about twice the size of the Russian recession during the global financial crisis in 2008. RUSSIA INVASES UKRAINE: LIVE UPDATES “Further escalation of the war could lead to more boycotts of Russian energy, which would severely damage Russia’s ability to import goods and services, deepen the recession,” the IIF said in a note to analysts last month. At the same time, Goldman Sachs forecast that the economy could shrink by 10% this year – having previously forecast growth of around 2% – while Capital Economics forecasts a 12% contraction. Barclays economists, including Brahim Razgallah, said in a note to analysts that the Russian economy could sink by as much as 12.4% in 2022. Russian President Vladimir Putin attends a meeting with young award-winning cultural professionals via video conference in Moscow, Russia, Friday, March 25, 2022. (Mikhail Klimentyev, Sputnik, Kremlin Pool Photo via AP, archive / AP Images) “Given the current geopolitical situation, we assume that the sanctions will be long-term,” they wrote. Western allies have targeted Russia with severe financial sanctions since the February 24 invasion of Ukraine, including cutting off a key part of Russia’s central bank by preventing it from selling dollars, euros and other foreign exchange reserves in the $ 630 billion reserve. blocking some financial institutions from the Swift messaging system for international payments; and imposing sanctions on hundreds of Russian lawmakers and elites with close ties to President Vladimir Putin. In addition, hundreds of Western companies – including Coca-Cola, McDonald’s and Goldman Sachs – severed ties with Moscow after the invasion began as they faced intense pressure from investors and consumers. The pace escalated as incessant fighting in Ukraine sparked a massive humanitarian crisis. Putin has warned that Russia is facing rising unemployment and inflation as it faces international sanctions, which it has referred to as an “economic blitzkrieg.” Moscow is also on the brink of a historic bankruptcy, according to Moody’s, because it tried to service its dollar-denominated bonds. It would be the first time Russia had defaulted on its foreign debt since the 1917 Bolshevik revolution. Pedestrians enter the entrance to a branch of Uniastrum Bank LLC, part of the Bank of Cyprus Group, in Moscow, Russia, on Tuesday, March 19, 2013. A double tax avoidance agreement and low taxes have made Cyprus the film of choice for Russians (Andrey Rudakov / Bloomberg via Getty Images / Getty Images) Russia paid on April 4 for two government bonds in rubles instead of the dollars it agreed to pay under the terms of the securities. Russia “therefore can be considered a default according to Moody’s definition, if it does not heal by May 4, which is the end of the grace period,” Moody’s said on Thursday. “Bonds have no provision for repayment in any currency other than dollars.” GET FOX BUSINESS IN ENGINE BY CLICKING HERE Finance Minister Anton Siluanov told Russian state media earlier this month that if the Kremlin was forced to default on its debt, it would take legal action. “We will sue because we took all the necessary steps to get the investors to receive their payments,” Siluanov told the Kremlin-backed Izvestia newspaper. “We will show the court the proof of our payments, to confirm our efforts to pay in rubles, as we did in foreign currency. It will not be a simple process.” It is not clear who Russia will sue.