Effects of the EU-Russia Economic Sanctions on Value Added and Employment in Austria and the EU

The ongoing trade conflict between the EU and Russia could have noticeable effects on the European economy given the importance of EU exports to Russia. After a decline of Austrian exports to Russia in the wake of the economic crisis exports performed well in recent years. When the economic situation in Russia worsened and the sanctions became effective in the summer of 2014 trade relationships deteriorated considerably: Austrian exports declined by more than 7% in 2014 and by more than a third in the past year. Exports developed in a very similar pattern in most other EU countries as well. The current study provides estimates of the economic consequences of the export sanctions approved by the European Council as well as the counter sanctions enacted by the Russian Federation on all EU countries. While past studies focused on value added and employment effects of total export losses, complex econometric methods are applied now to measure the specific effects of the sanctions – this is the economic impacts linked to exports lost due to the sanctions as opposed to other external factors (e.g., devaluation of the Russian Rubel, decline of oil prices, etc.). For this purpose, a multi-country econometric input-output model is used.