Russia Is Puny

Angela Merkel Vladimir Putin Dmitry Medvedev George W. Bush Nicolas Sarkozy. REUTERS/Sergei KarpukhinMatryoshka dolls with politicians’ portraits are displayed at a souvenir stall in Moscow February 27, 2008. Politicians pictured are Russian President Vladimir Putin and Dmitry Medvedev

Russia’s recent activities have captured the attention of the world.

It’s role in destabilizing Ukraine have earned it economic sanctions from the U.S. and European Union. And Russia has returned fire with economic sanctions of its own, including sweeping bans on food imports from the west.

While these sanctions are likely to impact Russia and some of its trading partners materially, they are also likely to have a surprisingly small impact on the global economy as a whole.

“In principle, the size of Russia’s economy — less than 3% of global GDP — suggests a limited impact on the global economy,” writes Barclays’ Christian Keller.

Keller offered this eyeopening chart (see below) of how Russia fits into the bigger picture. As you can see, Russia accounts for less than 2% of the world’s imports. The financial industry’s exposure to Russia is also quite small.

Relative to the U.S. and other developed economies, the E.U. has much more at risk. And it certainly doesn’t help the E.U. that its economic recovery story has been falling apart.

Still, the E.U.’s exposure to Russia is small. Exports to Russia account for less than 3% of total exports. Even food exports to Russia account for just a fraction of a per cent of total exports.

“By themselves, Russia-related sanctions should not have much impact on the global economy,” said Keller.

Having said that, Keller warns that an “escalating tit-for-tat trade war” would certainly make things worse.

Yes, the state of relations between Russia and the rest of the world is not good. But it isn’t the end of the world.

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