Sanctions are less painful than it may seem

The deepening sanctions battle over Ukraine is already tipping Russia into recession, rattling nearby economies and threatening to deal a blow to Europe's wobbly recovery, which could dampen global growth.

That fear of wider spillovers shows why the West is moving gingerly in cracking down on Russian President Vladimir Putin, say a host of economists and investors, despite mounting pressure from many U.S. lawmakers to quickly turn up the sanctions heat, the Wall Street Journal writes.

European states are also worried that sanctions against Russia may harm the EU economy.

However Councillor of the IMF European Directorate Antonio Spilimbergo believes that the sanctions may be much less painful than it may seem. According to him, it's very hard to measure the economic effect of the sanctions itself, but the whole situation, the atmosphere of instability is much more dangerous.

"As for capital outflow this year, we forecast it will be at the level of 100 billion. However, there is great uncertainty. As for the second question, I mean the consequences of sanctions, we noted that concerns about sanctions could be much more dangerous and serious than the sanctions themselves. Economically, it is difficult to define expenditures from certain sanctions, but the atmosphere of uncertainty, especially among investors, has significant influence," he said.

According to the expert, the sanctions are not the only problem Russia is facing. "Russia's estimated economic growth is 0.2 percent this year and 1 percent next year, but there is great risk that this prognosis will be downgraded," the expert says.

This means that the country will probably face a lack of investment, he explains. According to Spilimbergo, the political situation is not the only reason why the Russian economy is in such a state.

"The Russian economy has some structural problems. They existed in the past as well. In fact, economic growth slowed down in 2010," the expert says. In order to overcome these difficulties Russia should maintain macroeconomic stability, struggle against inflation and establish a free currency rate, he believes.