Russia Is Puny

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Russia Is Puny

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

Its role in destabilizing Ukraine has earned it economic sanctions from the U.S. and the 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 affect 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 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 EU has much more at risk. And it certainly doesn't help the EU that its economic recovery story has been falling apart.

Still, the EU'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 percent of total exports.

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

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. Read »

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