Ukraine, Cottarelli: “The economy has held up, the sanctions on Russia are needed”

The words to Adnkronos: “There wasn’t the perfect storm but it’s not money that can force Putin to end the war”

One year of war in Ukraine it had an impact on the economy. In Italy, in Europe and in Russia. Until what point? And with what consequences for the future? Carlo Cottarelli today he is a senator of the Democratic Party, but he has spent a lifetime at the International Monetary Fund and is an economist who has always been attentive to economic analysis. In an interview with Adnkronos, he talks about the trend of GDP and that of inflation, but also about a profound redistribution of wealth.

“We started the year with the fear that the increase in gas prices had had a catastrophic effect on our economy. Some thought that the perfect storm for Italy and the world would come in the autumn. Not there was”, is the premise of his analysis. Because? “Because the central banks have reacted with an increase in interest rates to the increase in inflation but they have not been enormous increases. We were used to zero rates but the current ones are still low rates. Fiscal policies have been less expansionary than previous year but there was no scary squeeze.” In the end, Cottarelli reasons, “much ado about nothing”.

Of course, he points out immediately afterwards, “there were some sectors that suffered more, those that exported to Russia, and those with fixed incomes suffered more. There was a strong redistribution of income in 2022, one of the strongest of the past decades”. Income redistribution means that someone got rich and someone else got poor. Things went better for the state, which “gained because the government bonds in circulation were eroded by inflation”, and worse for savers “who invested directly and indirectly in government bonds and lost”.

There has also been debate for months on the real effectiveness of the sanctions against Russia and, above all, on the real conditions of the Russian economy, given the difficulty in evaluating reliable data and the need to purify the effects of Moscow’s propaganda. “The initial estimates made by the World Bank and the IMF on the Russian economy, with a fall in GDP of 8%, were exaggerated”, admits Cottarelli, adding: “Sometimes economists make predictions by putting what they want to happen”. The impact, he explains, “has been there, with negative growth for Moscow, and will be felt over time”. But he must be said with equal clarity that “it is not the sanctions that can force Putin to end the war. They are a negotiating tool, which will arrive at a certain point, which is not irrelevant”.

(Of Fabio Insenga)