War and sanctions means higher inflation

RUSSIA MAYGDP have tried to build a “fortress economy”, but it is the West that currently looks financially impervious. Compared with the deep economic crisis brought about in the country by Western sanctions, the consequences for the rich world have been small. Though American stocks fell sharply when the war started on February 24th, on March 2nd they closed almost 4% higher than their level the night before the invasion. European stocks are about 4% down—a big hit, but nothing compared with the financial rout under way in Russia, where the currency has collapsed and stockmarket trading has been suspended for days.In part the muted reaction reflects Russia’s low weight in the global economy: about 2% in dollar terms. The country’s relative poverty and smaller population when compared with the rest of Europe mean that its exporters depend on European demand but not vice versa. Goldman Sachs, a bank, estimates that the loss of exports caused by a 10% fall in Russian spending would cost the euro zone only about 0.1% of its , and Britain still less. Financial links are modest.