Brexit result has had only minor impact on Russian economy so far

BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/26

The immediate effects of the UK EU referendum on the Russian economy are quite marginal at this point. Oil prices fell, the ruble lost ground a little, and Moscow share prices dropped slightly on news of the vote outcome last Friday (June 24). They all recovered this week. President Vladimir Putin and his top cabinet ministers commented the effects mainly by noting they expected the initial market reaction to pass within a few days, although e.g. economy minister Alexei Ulyukayev said heightened uncertainty from the Brexit vote will continue.

The impacts via real economy channels will only emerge gradually along with the Brexit process. The direct impact from Russia’s trade with the UK will be small, given that the UK only accounts for around 2‒3 % of Russian foreign trade. A much larger issue for Russia is how Brexit will affect economic growth in EU countries. The indirect effects of Brexit on the Russian economy and markets are hard to estimate in light of the great economic and political uncertainty surrounding the UK’s departure from the EU.

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