Last week, Russian financial markets suffered a blow after the U.S. Department of Treasury had imposed new sanctions on 6 April, targeting not only government officials but also seven businessmen and 12 companies they control. By mid of last week, the RUB lost around -11% to the USD, yields on 10-year government bonds rose by +8% and the MOEX stock market index fell by -8%. Markets remained volatile until Monday as many analysts had expected the U.S. to announce further new sanctions owing to Russia’s role in Syria. However, as President Trump drew back from new sanctions yesterday, markets have recovered some ground, improving some 4% against last week’s lows or peaks, respectively. The sanctions will certainly affect the targeted companies, but Russian authorities have pledged to help if needed. For now, we do not expect a significant macroeconomic impact and retain our forecast of +1.9% GDP growth in 2018. Meanwhile, higher oil prices will ensure that Russia continues to run current account surpluses. A first estimate indicates an external surplus of +USD29bn in Q1 2018, up from +USD22bn in Q1 2017 and +USD35bn in 2017 as a whole.