The Wall Street Journal reports,"since Russian forces took control of Crimea on Feb. 28, markets in Moscow have plunged to levels not seen since the global economic crisis, with the top 50 companies shedding $110 billion in capitalization".
The ruble has hit record lows and many economists have slashed their 2014 growth forecasts by more than half. And that is before any sanctions have even been introduced.
The increased nervousness within Russia's business community comes as Western leaders have turned up the volume in recent days on the threat of sanctions.
But so far, Mr. Putin has shown no signs of backing down from increasingly tough talk coming from the West, and appears ready once again to dismiss complaints from Russia's moguls.
His personal approval rating rose almost 10 points to a three-year high of 71.6% over the past month, state pollster VTsIOM said Thursday. Almost two-thirds of those polled last weekend cited the Ukraine crisis as the biggest factor in their opinion, while 32% cited the Winter Olympics in Sochi.
The government official said those in Mr. Putin's inner circle are convinced they have a historic opportunity to regain Crimea, a territory ceded to Ukraine only in 1954, and see the possible economic cost as less important.
A spokesman for the Russian president acknowledged that the country's leading businessmen had been in "constant contact with the government" about sanctions, but said Mr. Putin hadn't met with any of them.
A person who attended a recent meeting between some of Russia's richest industrialists and high-ranking government officials to discuss the overall economy said the mood turned tense when the issue of sanctions was brought up.
"Questions were asked about how the situation with Ukraine might further affect the market and how the government might respond," the person said. "People wanted to know exactly how things might go."
Still, veteran bankers in Russia say the threat alone has taken its toll on Russia's already sluggish economy.
"Even if they all start kissing and making up now, the momentum of the events of the last month means that any hope of the cavalry storming in and saving the day in terms of economic growth for this year has gone out the window," said a senior banking adviser in Moscow. "The damage has already been done."
Russia was already dealing with slowing growth, rising inflation, a weakening ruble and persistent capital flight. Economic growth last year clocked in at just 1.3%, and Russia's central bank has forecast just 1.5% growth this year.
Russia's primary stock index plummeted 11% on March 3, the first day of trading after Russian troops entered Crimea, and has lost ground since. The ruble has declined 11% against the dollar since the beginning of the year and the central bank was forced to spend $11.3 billion on the day of the market plunge to stabilize the currency.
On Wednesday, Mr. Putin said in a meeting with the heads of Russia's central bank, finance ministry and economy ministry that the current growth rate wasn't good enough, and "we need to achieve stronger dynamics."
Alexei Kudrin, a former finance minister who attended the meeting, warned in a speech in St. Petersburg on Thursday that the authorities were underestimating the potential impact of sanctions, the Interfax news agency reported.
"The negative impact isn't coming from sanctions at all. The negative impact here is more from the perception of Russia from the main sources of global capital as a tough place to justify investment," he said. "This takes 5% at the very least off the value of Russian assets for a long time to come."
In a recent research note, Deutsche's Bank John-Paul Smith advised clients to steer clear of Russia entirely and suggested no longer considering it an emerging market but rather a riskier frontier market.
