A shuttered stock market, close to default, business boycotts and a rush to the cash machines: the Russia economy is on its knees just eight days into the invasion.
The scale of the looming economic collapse has clearly alarmed Russia’s business elite following a tidal wave of Western sanctions with oligarchs close to Vladimir Putin breaking cover to criticise the invasion.
JPMorgan warned on Friday that the country is facing a hit as great as Russia’s 1998 financial crisis, predicting an 11pc peak-to-trough GDP plunge. The Centre for Economics and Business Research expects a 14pc hit in lost output in Russia over two years.
Oil and gas is still flowing from Russia to Europe, keeping a vital revenue source for its economy and the Kremlin intact.
But shoppers and industries, including banking, shipping, aviation and retail, are already feeling the heat as the West severs economic ties and turn Russia into a pariah state.
Debt default and a market rout
Putin has trashed Russia’s reputation with investors in a matter of days and brought the country to the brink of default.
Credit default swaps, which signal the risk of the Kremlin defaulting on its sovereign debt, have soared to a record high.
They point to a 65pc chance of the Russian government defaulting, meaning it cannot repay its debt and misses payments, such as on the interest. Analysts believe Moscow may choose to pay local bondholders while shunning foreign creditors.
Russia last failed to pay its bondholders in 1998 when the country plunged into a financial crisis and a deep recession.
“Once you go into default, then it takes a long time to negotiate restructurings, a long legal battle and then they have to climb back up the rating scales,” says Tim Ash, an emerging markets strategist at BlueBay Asset Management.
“Russia is going to pay a high price for this for a very long time. Its borrowing costs will remain very high for a long time, even with peace.”
Russian assets have taken a battering on financial markets, forcing Moscow to shutter its stock market indefinitely.
The rouble has plunged by 35pc against the dollar to hit record lows since mid-February and many analysts warn it could slide even further. The slump will ramp up the pressure on ordinary Russians as it will stoke inflationary pressures by lifting the cost of imports.
Meanwhile Russian stocks are being held in suspended animation after Moscow’s stock market was closed on Monday.
Its blue-chip stocks had already plunged by a third in just weeks but analysts expect them to crash much further when Moscow’s market finally reopens.