ECB sees serious risks from Ukraine for Russian economy

6th March 2014, Comments 0 comments

The Ukraine crisis currently poses a threat only for the Russian economy and some neighbouring states, but not for the eurozone, European Central Bank chief Mario Draghi said Thursday.

"The growth impact on the Russian economy is severe," Draghi told a news conference.

"We are also seeing some financial impact on some countries that are bordering" Ukraine and Russia, he said.

But for the eurozone, any fallout would likely be limited for the time being, Draghi continued.

"When we look at Ukraine, if we look at that from a purely technocratic point of view, at the amount of trade, we have to say that the interconnections are not so important as to suggest a strong contagion from that region," Draghi said.

But he warned that the wider picture should be kept in mind, because the geopolitical risks "could become substantial".

The ECB had not drawn up a range of different scenarios to predict what the wider impact could be if the crisis continues for a long time, Draghi said.

"It's difficult to see what impact it will have over two or three years, for example, the impact on the energy market," the central bank chief said.

"If we look at just the next six months, the impact is very mild, but if we look at the next one-and-a-half years, it could be very serious.

"We poor central bankers don't have enough information to asses the impact at such an early stage in the crisis," he said.

© 2014 AFP

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