Due to the dramatic civil conflict in Ukraine, investors have started to avoid the country as a potential business arena. This move may lead to negative consequences for the overall Russian economy and the country may enter into a disturbing state of recession. According to the International Monetary Fund, Russia will suffer greatly during this current socio-economic situation.
Europe and the US blame Moscow for creating the tension in Ukraine which has, in turn, led to the freezing of numerous Russian officials' assets. While the Russian economy is gradually deteriorating, the Ukraine's pending presidential elections have been placed at a huge risk.
Some European companies have already suffered tremendously from this dramatic situation. Carlsberg, a Danish brewer, has already reduced its earnings. The brewer blames the instability of the Russian rubla, which has fallen more than 7% against the US dollars this year, as well as reduced consumer demand from Russia. The brewery considers them to be the potential determining factors for its decreased performance In fact, due to the current tension in Ukraine, the company's financial shares have fallen down up to 12% this year.
The French financial company Societe Generale is one of the businesses that have been significantly affected by Russia's current political situation, reducing its first quater net earnings to 416 million euros, a signficant decrease from 798 million, compared to the very the same period from past year. "The write down reflects the decline in ruble/euro exchange rate parities, the slowdown in the economy and an increase in Russia's risk premium in the current environment," the French financial company has announced. Societe Generale has incicated a fall down of shares equal to 1.6% in Paris.
As the political setting in Ukraine deteriorates, it's very likely that many European and American corporations and businesses may demonstrate lower profit performance, due to increase consumer demand from Russia and Ukraine. As the conflict continues to affect the economy, everone hopes that the political problems have been quickly solved so that the the current financial situation improves.
