Impact of Trade Sanctions against Russia: Analysis using international input-output tables

Immediately after Russia launched its invasion of Ukraine on February 24, 2022, the G7, the EU, and others imposed economic sanctions, including trade measures, against Russia. The sanctions were expected to have a serious impact on the Russian economy. However Russia's real economic growth rate in 2022 was only down by 2.1%, leaving doubts about the effectiveness of the sanctions.

Therefore, in this paper I conducted a simulation using the OECD "Inter Country Input-Output Table" (ICIO) to analyze the impact of the trade sanctions against Russia on the production activities of each country.

If sanctions and countermeasures reduce trade between OECD member countries and Russia by 20%, Russian production will fall by 4.76%, mainly in the mining and petroleum and coal product manufacturing industries. This figure is close to the rate of decline in Russia's GDP during the chaotic period of the late 1990s, meaning that it will have a certain impact.

However, based on the actual trade trends after the sanction, I analyzed the case where only OECD countries cut their exports to Russia and Russia does not restrict exports to sanctioned countries. In this case, even if exports decreased by 20%, Russia's production value would only decrease by 0.02%. This result can be attributed to Russia's trade structure, which mainly exports raw materials and imports final goods.

Based on the analysis in this paper, the trade sanctions seem to be largely ineffective in the current situation where the number of countries implementing sanctions is small and Europe, Japan and other countries imposing sanctions are accepting imports from Russia.

This is the English version of the Japanese Policy Discussion Paper (22-P-027) with some additional information and changes.