Russia-Ukraine crisis: Hungary is also among the more vulnerable economies, according to Moody’s
The International Credit Rating Agency’s 12-page study now says its baseline forecast scenario does not anticipate an outbreak of an open war between Russia and Ukraine.
According to Moody’s analysis, if the tension were to escalate into a Russian-Ukrainian armed conflict, it would not be at all extreme for it to spread to neighboring EU countries. He also calls Russia a complete halt in Russian energy supplies to Europe.
The study finds that Estonia, Latvia and Lithuania are most exposed to the effects of a possible escalation of Russian-Ukrainian tensions in the EU region of Central and Eastern Europe, as all three main ring-fencing channels – energy, trade, security – would have significant effects on three Baltic economies.
However, the risk of all this being put under considerable pressure from the sovereign debt profile of the three countries is low, as these economies have already demonstrated that they have been forced to strengthen their own energy security by imposing sanctions on Russia. In Moody’s study.
According to the analysis, of the three Baltic economies, Latvia and Lithuania are the most dependent on Russian energy supplies. Latvia is fully dependent on Russian natural gas, importing 42 percent of Lithuania’s natural gas needs and 69 percent of its crude oil needs from Russia. That means 72 percent of the two countries ’total energy supplies depend on Russian supplies overall, according to a study by Moody’s. The credit rating is therefore also due to the fact that within the European Union, free land storage in Latvia – the stocks would cover Latvian consumption for more than six months – and Lithuania has already established a floating port terminal in 2014 to receive liquefied natural gas (LNG).
As an oil shale producer and exporter, Estonia is in the position of the EU countries with the lowest energy imports, and this fact largely isolates the Estonian economy from any disruption to Russian supplies, Moody’s said.
Within the EU region of Central and Eastern Europe, Hungary and Slovakia’s dependence on Russian natural gas supplies is particularly high, importing 45 percent and 78 percent of the two countries’ crude oil needs from Russia, respectively. All this means that these two economies have the highest energy risk exposure in the region, and neither of them has direct access to LNG terminals, according to a study by Moody’s.
The credit rating is liquid: it is true throughout the European Union that Russian natural gas cannot be easily and quickly replaced by other sources, not least because the capacity of terminals built to receive disbursed land is at best only about a quarter of total European consumption.
However, a recent assessment by another major London think tank, the Center for Economics and Business Research (CEBR), has highlighted that the Ukrainian economy is by far the biggest loser in the Russian-Ukrainian conflict.
The house said its model calculations show that in the seven years until the end of 2020, the Ukrainian economy suffered a loss of an average of $ 40 billion a year, or a total of $ 280 billion, from the Russian annexation of the Crimea.
This means that Ukraine suffered 19.9 percent of Ukraine’s pre-conflict gross domestic product (GDP) each year of the period under review, according to a study presented by CEBR in London.
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