EME Macro/Strategy: how Russia’s fallout is reshaping CIS-plus

Almost nine months after the inception of the Russia-Ukraine conflict, some of our initial assessments remain valid: the sanctions will not be, by themselves, enough to cripple Russia in the near term, and the inflation hit for the West is significant and long lasting. In this report, we broaden our assessment and present our calculations of how Russia’s budget position could evolve over the next two years, as the global economic slowdown unfolds, and we underscore how data transparency in Russia is worsening significantly. Along with much bad news, we highlight the significant, long-lasting, positive spillover effects on some of Russia’s neighbours: Kazakhstan, Georgia and Uzbekistan. These countries are gaining human capital, and trade and businesses are relocating, which are, together, delivering significant a short-term GDP growth boost and likely meaningful GDP trend gains. In addition, all face limited disruptions in both current and future energy supplies. Geopolitics remains a risk and the greatest hurdle for the region’s success. In this report, we flag the countermeasures that countries are implementing to limit these risks.