According to Goldman Sachs experts, this year the Russian economy will decline by 10% as a result of the sanctions imposed by the US and the EU. The main impact of sanctions will be felt by Russian exports and imports, while inflation will rise to 20% by the end of the year, which is much higher than the central bank’s target of 4%, writes Business Insider.

According to the bank, sanctions by the US and its allies will succeed in undermining Russia’s economy and punishing the country for its special operation in Ukraine.

Western sanctions, according to the Bank’s economist Clemens Grafe, will lead to a drop in exports by 10% and imports by 20%, will also affect restrictions on financial activities and the departure of Western companies from Russia.

The Wall Street Bank believes Russia’s GDP will shrink by 10% in 2022, compared to the 7% decline previously expected. Before the special operation, its economists expected the country’s GDP to grow by 2%.

The World Bank predicts this situation threatens to become the worst recession in Russia’s modern history since the early 1990s and will even eclipse the 7.8% economic contraction seen in 2009 during the global financial crisis.

The bank believes that most of the economic problems will be caused by sanctions by the US and its allies against Russia. They have banned several major Russian banks from using Swift and frozen about half of the central bank’s foreign currency reserves by about $640 billion.

More recently, the G7 countries also said they would end normal trade relations with Russia by revoking its “most-favored-nation” status, which allowed trade on preferential terms under World Trade Organization rules. The U.S. has also banned imports of Russian fossil fuels.

At the same time, we should expect a sharp rise in prices and further deterioration due to the ruble’s depreciation, which makes imports more expensive, analysts said.

Russia’s central bank has raised the interest rate to 20 percent and the government has restricted international remittances to curb inflation and prevent a full-blown currency crisis.

However, Russia is benefiting from rising commodity prices caused by the special operation in Ukraine. Grafe said the trade surplus will still grow despite the sanctions, thanks to Russia’s role as a major commodity exporter.

“The foreign exchange surplus arising from the trade balance should, in our view, put the Russian Central Bank in a position where, in principle, it can gradually lift capital account restrictions.”