Is Russian Economy Recovering?
The fall in commodity prices and Western sanctions have been hurting Russian economy in the last year. And although the official government forecasts are pointing to the end of recession in 2016 and slowdown in inflation, there is a possibility that ongoing military operation in Syria and escalating conflict with Turkey may push the recovery further ahead.
Looking at the recently released data it is still difficult to believe that Russian economy is touring around. The GDP shrank an annual 4.1 percent in the third quarter of 2015, third straight period of contraction. Meanwhile, the ruble depreciated nearly 86 percent against the USD since February of 2014 when the political crisis in Crimea started. The inflation rate jumped to double-digits, leading to a fall in real wages and to higher imports prices, thus hurting household spending. As a result, retail sales contracted for the tenth straight month in October. Reduced consumer demand also hurt the consumer-oriented sectors of the economy: the food industry that showed steady positive dynamics before, has shifted to stagnation in the last 4 months. In addition, exports have been persistently falling on a yearly basis since August last year mainly due to lower commodity prices and a decline in trade with main partners.
11/26/2015 5:50:20 PM