European Bank for Reconstruction and Development is warning that the crisis in Ukraine could send Russia, and the global economy, into recession.
The bank is holding an annual two-day meeting in Warsaw. The bank slashed its outlook on growth.
"What we are worried about...is the potential escalation of the sanctions, particularly on the financial system," EBRD chief economist Erik Berglof told a news conference. Russia's economy was slowing before its annexation of Crimea.
The extra strain means growth is now likely to flatten this year and reach just 0.6 percent in 2015. As it is, Ukraine's economy is expected to plunge 7 percent this year. "Under a more negative scenario, the Russian economy would enter recession and output contraction in Ukraine would deepen...this would bring growth in the EBRD region to a standstill. At this point, the Russia-Ukraine crisis would start impacting the global economy," said the EBRD.
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