Russia is Expected to Enter a Recession in 2015
by John | 22nd September, 2017

Headlines quoting, Russia will fall in recession off late, has taken the world by surprise. Noted economists, working closely with the Russian government bodies as well as the World Bank, forecasted, the country will drift into recession in 2015. Consequential drop in the oil prices and firm existence of inflation leads in the initial shrink since 2009. In his interview with Bloomberg Anton Siluanov; honorary Finance Minister provided clarity, that Russian economy will be hit hard if the oil rates go downhill to $60 per barrel. Despite of the very fact that, the rates of Brent oil remains stabilized at a point below $80, yet this decline of approximately 35% in 2014 is enough, to mark the dawn of a catastrophic condition. While global sanctions are working in full swing, financial climb in Russia is not expected to increase by 1% next year. Financial analysts while attempting the graveness of, will Russia go into recession in 2015, emphasized that economy is projected to shrink around 0.8% by 2015 compared to an up climb of 1.2% claimed by in their reports earlier, for 2015.

russian_gdp_and_oil_price

Courtesy: Finanza

News also floated in stating that the government is all set to adopt more stern approach to the financial budget plan and put to practice all tools to combat the crises. Finance ministry is also believed to be busy adjusting their utmost priorities in budget plan. Data’s reveal that various social commitments have been met and Russia is in no mood to amend them; however preferences of the secondary level are currently being delayed.

russia gdp annual growth rate 1996 to 2014

Courtesy: BusinessInsider

 Albeit the topic, Will Russia go into recession in 2015 perplexes economist yet the bottom-line remains, whether the country with behold fruitful return by next autumn.

Baffling Budget Plan

As November 2014 approached its end Rouble succumbed to its greatest one –day decline since 1998. Dip of about 9% compared to dollar before rounding up, post questionable interference by Central Bank also created an alarm. However the fact that 500 billion Russian currencies will be spent from the Reserve Fund in 2015 in such shaky scenario still remains intact. Budget 2015 – 2017 confirms spending of £5.9bn from Reserve Fund’s very own budget in 2015. Maxim Oreshkin, distinguished financial strategist and finance head supports the fact that Russia will fall in recession; yet he mentioned that; government is prepared to shell out even more to back the economy. He supplemented that incase the average oil rates stabilized at $80 a barrel next year, the financial predictions for a dip in GDP is at par with the projections made by the finance minister claiming a 0.8 percent deflation .

Fedral Government Budget Execution and Annual ProjectionsCourtesy : Forbes

 

Beyond Devastation

Russia has been long known as a non – endowing country across the globe yet the strongest of hedge fund master prevalent, and will preserve its reputation until both, average oil prices and Rouble rates don’t slid at its minimum. Financial figures reveal that oil prices have dipped by around 40 percent since last summer due to a superfluity caused by growing oil production by US shale. Requirements too have declined majorly in China; who until now was regarded as the second biggest commodity consumer across the globe. Industrial production in China has shown a great fall in last few months. Convinced that Russia will fall in recession; OPEC ministers gathered to brainstorm a genuine chop in oil production and preserve the average oil rates, but dispersed without a conclusion. Answering the seriousness of will Russia go into recession in 2015? Abdallah Salem el-Badri the secretary general of OPEC cited that; the oil rates are going downhill but that does not compel the body to take a hasty decision. Dip in the oil rates has been arousing fear in many government and private dignitaries associated with the cartel alike. Many are yearning for the rates to pass $80 per barrel as this will balance the entire budget plan.

Hunting For Surge

Addressing the nation Putin approved the hurdles that has affected the economy hard and set forth an array of measures to face it. He plighted to minimize intrusive audits by the governments on petty business owners; induce 2 year tax fiesta for upcoming small entrepreneurs and establish a complete absolution for non-resident nationals who are prompt in returning the capital. Affirming that circumstances ahead will be highly complicated he stated care must be taken to dodge the mouse-trap of zero-level development and acquire an above the rest global expansion within following 3 to 4 years. Putin motivated the government personnel’s to discharge their duties well and raise the currency prediction from its current state. Never the less Putin was heard acclaiming that week state of Russian currency would aid in making the country far more competent .He advised the local manufacturers to access this chance and grab market shares from global players over the following few years.