Russian Federation Economics
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Even Without Sanctions, Russia's Economy Is Looking Sicklier Than Ever

Even Without Sanctions, Russia's Economy Is Looking Sicklier Than Ever | Russian Federation Economics | Scoop.it
Russia's central bank says it's raising interest rates again to fight inflation. One analyst says it's to stem capital flight
Nathan Smith's insight:

Even as Russia’s economy is being weakened by Western trade sanctions, some economists believe that the Russian economy would have been headed into a recession either way. The Russian Central Bank recently raised nominal interest rates for the second time this year which is further depressing the Russian economy by decreasing consumer spending. It is also believed that Russia’s currency will continue to inflate at a higher rate than that of previous years. Economists believe the reason for this is that Russian wages have been rising at a steady rate while productivity has not significantly increased to create a matching increase in real gross domestic product. If Russia’s central bank is unable to solve the problems facing the nation’s economy, Russia will most likely be thrown into one of the worst economic recessions of the twenty-first century.

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Russia stocks fall as Ukraine crisis intensifies

Russia stocks fall as Ukraine crisis intensifies | Russian Federation Economics | Scoop.it
Russia's stock market and currency tumbled Thursday as investors and traders worried about an intensifying standoff in eastern Ukraine.
Nathan Smith's insight:

The Ukrainian conflict with Russia is not helping with Russia’s economic issues. The Ukrainian situation has intensified, as Ukrainian forces killed five Russian militants while trying to take down Russian roadblocks in Ukraine. President Putin said that Ukraine’s use of armed forces will result in consequences. Russia, however, faced its own consequences when its benchmark index, which had been slowly increasing, quickly fell. The index has fallen by 13.5% since the beginning of the year. Many worry about what a full military confrontation would do to it. The Russian ruble was also affected by the sudden intensification of the crisis, as it depreciated even further by 0.2%. Not only has Russia’s economy been affected by this crisis, but Germany’s stock market also took a hard hit. Germany also has a big trade relationship with Russia, so even the decline in Germany’s stock market could impact Russia. It is clear that the Ukrainian crisis is affecting economies all across Europe, none more so than that of Russia,as the already dwindling Russian economy is taking even a bigger hit from the Ukrainian crisis.

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Russia's Growth Was Already Slowing—Then Came Crimea

Russia's Growth Was Already Slowing—Then Came Crimea | Russian Federation Economics | Scoop.it
Capital flight and flagging business confidence may lead to a recession
Nathan Smith's insight:

Russia’s annexation of the Crimean peninsula has shown to have ultimately negatively affected Russia’s economy due to sanctions placed by the West, declining investment, and drops in consumer demand. Although many blame the slowing down of Russia’s economy on the annexation of the Crimean peninsula, it was actually already showing signs of a recession. The annexation of the Crimean peninsula is similar to the 2008 Georgia incident in that the military action taken in both accounts led to a major decrease in investment and foreign isolation to the Russian economy. To counter the sanctions, the Russian government plans for increase government spending and higher investment spending. “The European Bank for Reconstruction and Development said in December 2012 that Russia was becoming increasingly dependent on commodities and failing to prepare for a predicted fall in oil production in 20 years.” If Russia doesn't do something soon about their lack of foreign markets to trade with, their economy will just keep plummeting.

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Sanctions over Ukraine are taking toll on Russian economy

Sanctions over Ukraine are taking toll on Russian economy | Russian Federation Economics | Scoop.it
Putin could find the price for Russia's actions in Ukraine is a recession at home -- and a big blow to his popularity home
Nathan Smith's insight:

In the wake of Russia's invasion of the Crimean peninsula, the West has imposed economic sanctions on Russia's already unpredictable economy.  As a result it is becoming more difficult and expensive for investors who are seeking to put money into Russian companies. In addition, hostile economic conditions and the beginning of a recession is scaring away much of Russia's potential investor pool. In January and March alone more than 64 billion rubles left the Russian economy, which is more than the total for all of 2013. As a result of this it can be predicted that Russian incomes will fall as people demand less of domestically produced goods and services. This drop in demand will then push the nation's economy deeper into the already growing recession.

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Medvedev blames "certain forces" for Russia's economic woes - Shanghai Daily (subscription)

Medvedev blames "certain forces" for Russia's economic woes - Shanghai Daily (subscription) | Russian Federation Economics | Scoop.it
Prague Post Medvedev blames "certain forces" for Russia's economic woes Shanghai Daily (subscription) Earlier this month, Medvedev said Russian economy was stalling due to a range of global and domestic factors, including events over Crimea which...
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Russian Prime Minister Dmitry Medvedev stated that “certain forces” were trying to push Russia into an economic crisis, but he would not say who those forces were. Medvedev also admitted that the GDP growth has fallen to a mere 1% because of stalled gas and oil prices and a slowdown of investment as well as a very volatile market. Economy Minister Alexei Ulyukayev recently warned Russia that its GDP growth would fall even further to 0.6% if the $300 billion capital outflow happens. This is clearly bad news for Russia’s economy, as the GDP is not at a healthy growth rate and now they have to deal with a political issue as well.


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How Russia's Annexation Of Crimea Could Hurt Its Economy

How Russia's Annexation Of Crimea Could Hurt Its Economy | Russian Federation Economics | Scoop.it
President Vladimir Putin's swift move to annex Crimea has been popular among many Russians. But when it comes to Russia's economy, many analysts think the country's prospects are looking weaker.
Nathan Smith's insight:

Although Putin’s decision to take Crimea made him popular throughout Russia, it is no secret that their economy is under pressure. Russia’s economy is heavily based on its oil and gas exports. Because of the price increase in oil over the years, Russia was able take advantage of their large oil reserves and make a huge  profit. Russia became lazy with their oil and recently, their economy has been stagnating with low growth rates and high inflation. Sanctions set by the U.S. and Europe initially hit the Russian stock market with negative effects but has stabilized itself since then. Putin’s high popularity allows for an opportunity for him to make economic reforms and get rid of the corruption that plagues the Russian economy.

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Russia stares at recession as Ukraine crisis scars economy

Russia stares at recession as Ukraine crisis scars economy | Russian Federation Economics | Scoop.it
MOSCOW: Russia looks increasingly likely to sink into recession in 2014 as the knock-on effects of its standoff with the West over Ukraine hurt an economy already beset by structural problems. Data...
Nathan Smith's insight:

As the worst tensions since the Cold War arise between Russia and the West, Russia’s economy is suffering from the standoff. Even before the standoff, Russia was already facing a slowing economy due to slower consumer spending, smaller investment, and smaller demand for its energy exports. It hasn’t happened yet, but it is very likely that they will fall into a recession, which is two consecutive quarters of falling economic output. The Russian ruble suffered a fall down to record low values to the dollar and euro in March, which could lead to inflation. Since Russia’s budget heavily depends upon its energy exports to the West, sanctions from the West can quickly wear down Russia’s economy. Russia is able to lean back on its large foreign exchange and gold reserves which stand at $473.9 billion. Russia knows that these potential sanctions could mean a disaster for the economy so they have been sure to be public with the fact that they want to keep ties with European big business.

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Russia's economic fears and the Crimea crisis

Russia's economic fears and the Crimea crisis | Russian Federation Economics | Scoop.it
Professor Nikolay Petrov on the economic recession facing Russia and its possible role for President Vladimir Putin in the Ukraine crisis.
Nathan Smith's insight:

Russia’s economy is currently experiencing a recession due to a drop in investment, declining consumer demand, as well as decreasing incomes. Not only that, but the Russian rouble has depreciated 10% relative to the dollar through just two months. The Crimean parliament’s decision to join Russia has only made the economic situations worse. This situation may result in President Vladimir Putin’s administration coming to an end. In order to improve its economy, Russia has decided to “tighten the screw” and switch to a different model of relations between state and society. Attacking Ukraine might solve some of Russia’s problems, as it may promote mobilization as well as promoting Putin’s role as a leader. However, Russia’s aggression has already led to a fall in stock market as well as a decline in investment so attacking Ukraine may prove not to be the best idea after all. All in all, Russia’s economy is stuck in a hole because economic growth seems to have essentially stopped. Russian citizens’ drop in income as well as overall decrease in aggregate demand will push the Russian economy into an even deeper hole.

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Russian government admits economy in crisis as Ukraine weighs

Russian government admits economy in crisis as Ukraine weighs | Russian Federation Economics | Scoop.it
MOSCOW (Reuters) - Russia's government acknowledged for the first time on Monday that the economy was in crisis, undermining earlier attempts by officials to suggest albeit weakening growth could weather

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Nathan Smith's insight:

Russian government acknowledged that their economy was entering a crisis, stemming from Western sanctions over their invasion of the Crimean peninsula. These sanctions include travel bans and asset freezes “on those responsible.” Russia expects their full-year outlook to be at 0.00% and domestic demand to lower due to worse financial conditions. Also, the Russian ruble is down 11% compared to the dollar. Although the Russian bank has room to work with with their large reserves, if the Western sanctions continue, the Russian economy will be hit with a huge crisis.

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Ukraine crisis could hit Russian GDP - BBC News

Ukraine crisis could hit Russian GDP - BBC News | Russian Federation Economics | Scoop.it
BBC News
Ukraine crisis could hit Russian GDP
BBC News
The Russian economy may see zero growth this year because of the Ukraine crisis, Russia's finance minister has admitted.
Nathan Smith's insight:

Due to the recent controversy over the sudden annexation of Ukraine Russia has experienced a capital flight amounting to nearly $63 billion. This massive decrease was the result of the rapid conversion of rubles into foreign currencies. In conclusion, this will lead to a large decrease in investment by foreign countries and reduce Russia's GDP by a considerable amount.

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