Russia is headed for stagflation next year, as inflation is expected to reach 10% whilst the economy contracts. In the wake of Western sanctions and falling oil prices, the government has revised its economic forecasts for 2015, now expecting the country to fall into recession as the economy shrinks by 0.8%, wiping out the previous prediction of 1.2% growth.
OPEC’s announcement that they would not intervene to prop up falling oil prices has further tightened the screws. Sales of oil and natural gas account for 50% of Russia’s national budget revenue, and the Kremlin had been counting on a price of around $100 per barrel. The current price is closer to $70, and analysts believe it could still tumble as low as $60 per barrel next year.
To make matters worse, Western sanctions in response to Russia’s annexation of Crimea, coupled with sluggish growth in the European Union – Russia’s most important trade partner – are also wreaking havoc. Russian companies owe nearly $700 billion to Western banks, but foreign investment in the country has fallen dramatically, forcing companies like Rosneft, Novatek, VTB Bank, Rusnano and Russian Railways to turn to the government for support.
Mr. Putin has already scrapped high-cost infrastructure projects, including the $19 billion South Stream gas pipeline project to southern Europe and a high-speed rail link from Moscow to Kazan.
Despite this, President Vladimir Putin is still hugely popular among Russian voters. His approval rating hovers around 80%, and many in Russia see NATO expansion and the “colour revolutions” which toppled sympathetic neighbouring regimes as having put Russia on the defensive in recent years.
Is Russia’s economy headed off a cliff in 2015? Will high inflation and a shrinking economy produce a toxic mix of stagflation? Or will Vladimir Putin be able to appeal to Russian nationalist sentiment in order to wait out Western sanctions and falling oil prices? Let us know your thoughts and comments in the form below, and we’ll take them to policy-makers and experts for their reactions!
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maybe….
The 90s were a meltdown. This is a slowdown.
Possibly…. but Russia has weathered hard times before so don’t assume we will see a radical change in policy from Mr Putin…
It is highly probable that Russia is marching towards economic slowdown but Russian population will endure .
One day the people of Russia will get rid off theit oppressors. Then Russia can be part of the european family in peace and wealth. The day will came….because liberty and dignity are always stronger than any of an oppressor`s weapons.
What opressors are you talking about ? US or EU? Because it’s them who are doing everything in their power to harm Russian people right now, not anyone else. Western politicians don’t even bother to conceal it.
It’s always under a bloody meltdown. With all that money and resources and everything average person is still rather poor.
Hard to tell reality from smoke and mirrors, but regardless of sanctions, Russia as the number one petroleum exporter has to transform to something sustainable, or it will be supplying low cost manpower to the rest of the world after 2050. We have built many successful relationships with Russia in Europe, and this mutual investment is now placed under severe strain by a conflict that is being misused to divide and conquer by some. If Russia withdraws from Ukraine, I am not so sure we will necessarily love the face of that government. Now we risk having to carry the burden of pulling these countries out of their respective economic miseries at a great cost, when the dust settles. We have too great problems of our own for that, with unemployment close to 25 mill in the EU. Let’s make sure we’re not conditioned by nations distant from the European theatre. If we forget for a moment our differences, we all face common challenges and enemies, and the reward to making sure we are a resourceful and economically strong continent of Europeans is infinitely larger than what current propaganda may suggest.
this is probably what you would like! isnt it?
Is Russia marching towards an economic meltdown?
I wouldn’t call it “marching”, I rather say walking. It will take a lot more than a white glove waiter along with a sommelier presenting the legendary “sanctions” matched with the prefect wine to Putin. At this pace, two decades from now we will ask the same question.
Yes!
West is heading for social unrest.Russia will survive brutal attacks by market and political vultures because is big peace loving and strong country with excellent leaders.
So is Europe if we keep on following policies defined in Washington.
No, the EU is, thanks to the US;
http://rt.com/op-edge/211091-turkey-russia-east-pipeline-eu/
So here?s the bottom line; Russia sells even more gas ? to Turkey; and the EU, pressured by the US, is reduced to dancing like a bunch of headless chickens in dark Brussels corridors wondering what hit them. The Atlanticists are back to default mode ? cooking up yet more sanctions while Russia is set to keep buying more and more gold
yup
Fiat systems are ending. The Western lites will always voluntarily enact these crimes on their own citizens but will then say it was an accident or beyond their control. Russia at least is still trying to be a real and sovereign economy because it is a continent unto itself, and it CAN, unlike European countries that have Nothing. Russia is amassinggold and even some Euro countries are trying to repatriate their gold…but hey, it’s no longer there…
Stop TTIP and other Washington defined policies that are not beneficial to the people of the European continent.
Much like the same finacial DISASTER we see in Europe ?? Id say Russia is far from being in the pathetic tragic state Europe is currently in, heavily devided and falt broke.
“heavily devided and falt broke” According to the Putin bot here the broke Ruskis make more money than anyone else in the world. Russia already is broke, and they’ll be beyond broke with the US becoming the new gas supplier to Eastern Europe. As for who’s in a tragic state, Russia is experiencing a massive population decline and ethnic Ruskis are quickly becoming the minority there. You’re a big mafia country now, but soon you’re gonna be a little mafia country.
Russia is far smarter than the European brigade we have running our interests at present. We are allowing them to secretly do deals with the USA behind our backs. The Russians are doing what all governments are paid to do by their tax payers, and that is, to take care of their peoples interests in the way those citizens want it taken care of. Whether we agree with the Russian people or not is none of our European business. Putin is popular with his nation. What is far more important is that we should be keeping a very tight eye on whether those in ‘our set up’ are marching us toward ‘economic meltdown’ by being in bed with the bribery of US scam artists. Why do they want to keep this all closeted? Could it be because they know full well there would be riots in the streets if the sell out of us all comes to light?
http://www.globalresearch.ca/shale-gas-fracking-gmo-poverty-bankruptcy-under-the-ttiptafta-stop-the-corporate-plunder-campaign-for-an-alternative-trade-mandate/5376290
I’d rather under stars and stripes military leadership push Russia were they belong, to Asia.
would some people in west dare to share an macroeconomic point of view? then I would happily attend a debate on russeconomics..
Hope not.the previus Russian economical crises started in the early 80’s ,as a result of non reforms of Leonit Bresnief goverment,lead Europe into economical meltdown.
You haven’t yet seen how much the Russian sanctions posed on the EU will hurt the EU. Now parts of the EU depend on the goodwill of the Ukrainian Nazi government for their Russian gas. I hope you have enough woolen clothing’s :) As for contracting economy, see the GDP of EU countries minus new debt and minus another 1% at least because economists always manipulate data to make it better looking. In my town plenty of empty shop places because those shops that were still open a year ago are now bankrupt. Enjoy being the executors of Washington’s will and policies.
Mitsos, somehow I don’t think that Greece’s financial problems have anything to do with Russian sanctions. Greece’s problems started long before that and the situation was brewing long before that as well…
Did sanctions on Japan work or did they lead to pearl harbor ? And don’t forget the old greek saying ” someone can live well if his neighbour is happy and lives well ” The last thing Europe needs is another arms race especially during a severe economic crisis……
The eu is going down not russia
That is fine, hungry and in love with Putin! Lets see how long! ;)
I love it! Russian economy is breaking down and Putin is trying to divert attention to sacrificing for the glory of the Motherland. Those ships and planes don’t run on air! The Russian Navy is a joke, they have to send rescue ships out with warships to deal with breakdowns and provide spares. I suspect they could MAYBE field 4 divisions at full combat readiness but after 90 days they’d be a shambles.
European countries are all riddled with debt, derivative exposure through the roof, unfunded contingent liabilities and an ageing population. The USA is also crippled with debt, and only phantom Harry Potter like conjuring of numbers by statistic agencies to give the illusion that all is well.
Maybe you can ask your American friends to ‘torture some more folks’ as they seem to be so proficient at.
The same is going to happen in EU.No business without piece.
YES
Maybe but surely the bigger danger to Europe is the reinvigoration of divisions between Russia and Europe. Europe needs to properly analyse what it must do to minimise the economic and social effects of a deterioration in this relationship.
Wait till October 2015….
Not sure about a meltdown but major hardship for the people definitely. Heading straight back to the days of Communism when you had to queue for an hour to buy a kilogramme of potatoes. It all depends on how much the Russians miss that past. However…, already they are being encouraged to visit Crimea for their holidays (because they love it so much!) and not the Mediterranean. So Crimea definitely is in financial trouble and … so much for choice of vacation…
The European Union “shoots” its legs.
Germany, after the success of its post-war economy “miracle” and the success of the reunification in 1990, since the last four years of economic crisis at last feels to play a role in international politics.
However the American demonization of Putin, in which is Germany drawn first and foremost, is simply the lack of policy. Is the deadlock. This shortsighted American-inspired policy, damages Europe and pushes the Russians increasingly
further eastwards, expediting new alliances.
The Europe’s loss will be primarily 16 billion dollars for farm products due to Russian embargo.
Brazil and China are excited that they will cover this market. Maybe Turkey, too. And throughout South America.
All of them should be thanked Europe, USA, Canada and Australia.
Furthermore the BRICs advance to a new banking system and international trade. limiting the use of the dollar.
In recent years China signed more than 40 trade agreements with different currency than the dollar.
Moreover there is also the relationship of the BRICs with G77 which includes some 177 states.
All this trade is more than 50% of world trade and is increasing.
As soon as it will be 65%, then the dollar will be finished.
The “smart” money like Jim Rogers and Mobius, currently are investing in Russia, because they know its capacity in the coming years.
The Anglo-Saxon banking system, which has the monopoly for 200 years, by applying such sterile politicy, will turn away the world from itself..
I’m no economic expert, but when I look at the indicators of the Russian economy on this website, it looks like Russia is doing pretty well and it leads me to think that even if there is a hard time coming in front of them, they will be able to endure a while before a meltdown.
http://www.tradingeconomics.com/russia/indicators
Some numbers:
GDP : 2 100 B$
GDP growth rate : 0.7%
not a contraction as mentioned in the introduction
GDP/capita: 6 923 $
Which is extremely low compared to Euro Zone 31 807$
It shows the standard of living is much lower in Russia than in Euro Zone. Which also means there is a great growth potential.
Unemployment Rate: 5%
really good in comparison to Euro Zone’s 11%
Inflation : 9%
It will be a problem if it stays this high for a long time. Especially with low GDP growth.
Interest Rate: 10%
It’s really high compared to the 0.3% of the Euro Zone. I guess it’s the result of the central bank trying to keep the value of the money up.
Balance Trade : +10 786 B$
It compares to Euro Zone. France balance Trade is negative.
Government Debt: -0.5% GDP
Much better than Euro zone’s 2.9%
Ratio Debt/GDP : 13%
Great ! Euro zone is 90%. Russia still have a long way to go :)
Consumer confidence : -7
Still pretty good given the situation. Euro zone is -11
It’s most likely that my interpretation of the numbers is partial or incorrect and I welcome anyone that would correct me.
I think any resources can’t outweigh sound management. Despite debts problems, but western world is managed much better than Russia is. All modern technologies are being created in the west and it is just a matter of time when the oil and gas will no longer be so important for the world economy. What than for Russia? I red somewhere that on average one person in India has a wealth of 1000$ and on average one person’s wealth in Russia is below 900$, it’s hard to believe. And 35% of wealth in Russia is concentrated in a 110 peoples hands.
Many countries have problems with their economy, it is not only Russia. Each of them is looking for solutions and working to deal with such situations. There is no need to dramatise things that much.
Russians like Putin because he speaks with their voice. They can see that there are outside forces trying to destroy their country and Putin stands firm against them. If you have an aggressive and destructive approach towards Russia, you will achieve the opposite effect to what you aim. You will generate more resiliance in its people, more determination to survive, more creativity and unwillingly open new opportunities for development of their country. Russians will find new ways to deal with the difficulties, but you will not succeed in taking away their dignity and national pride. The aim of the EU and USA to bring Russia on its knees and subdue it, is doomed to failure and those who think otherwise, are just fooling themselves. Russia will not allow to be destroyed.
Is the West marching with them or are the Russians torture free?
http://www.dailymail.co.uk/home/index.html
Europe is in talks with and locked in with the scum of the earth.
Ooops, messed up with the link in the above post. It was meant to be of the US torture with the added collusion of Blair and Straw.
http://www.dailymail.co.uk/news/article-2867736/Shaming-West-Devastating-report-reveals-horrific-extent-CIA-torture-covers-Britain-s-role.html
And those who collude, will they face the Hague and incarceration the way they should?
http://www.theguardian.com/politics/2009/jun/18/tony-blair-secret-torture-policy
If I were Putin, I’d tell western banks to get stuffed. With a balanced budget and no debts, banks/rating agencies and other assorted financial criminals would have zero leverage.
And then enjoy the ride as debt ridden bankrupt Europe and USA slowly but steadily decline.
After wwII Russian society knows that they have to ‘survive’ sanctions even if it would mean breadline to the citizens, they live because of great propaganda machine. That’s it.
Personal referances instead of documented opinions is declaration of knwoledje weakness.
Russia should stop lying, stealing and has to stop acting, like in the medieval ages, but I believe, that Russian people are simply not ready to live like that (not all, but most of them), and that means, that Russia will fall, and it’s not impossible, that it will try to start a global war as it’s last chance to keep the lies alive.
All this because the bankrupt Western banking mafias are itching for war as revenge for them having lost Putin’s War against the Federal Reserve/Yeltsin fraudsters taking whole Oblasts’ resources with some briefcases full of paper for 50 M usd instead of 6 BN. They will back off or the World will not be as we knew it. Backs against the wall, Saudia Arabia’s oil wells may be obliterated first – a lot worse than anything seen before.
All considered, Russia never had a period of real democracy, and is now going backward to a kleptocratic fake democracy.
well it seems is what you hope no? two debates in 10 days you insiting in this while no coments on TTIP. No coments on sanctionin Israel, well every day your ideology is more clear i think!
can you explain why lot of european countries wan to declare palestine as a state if they are the Israelian friends? even Spain, one of the most reactioanry government… i dont understand!
Hi Jaume! We launched a debate on TTIP just over 2 weeks ago – https://www.debatingeurope.eu/2014/11/27/support-ttip-companies-sue-governments/ – and a debate on recognition of Palestine is upcoming.
Europe is a puppet of the US… they want a war with russia and they will do it. Putin will win. Unfortunately european people will suffer again because of useless and traitors who are leading us. Russia will do business with China and India which are bigger the the EU all together.
Should I invest in Russian vodka?
There is nothing more morally corrupt than the kakistocracy of warmongering kleptocrats which have been running the West in order to achieve a one world order. What will happen when that is achieved?
EU is TRAIN WRECKING itself by enacting the US’s sanctions, the US is literally PAWNING Europe to get at Russia .. And Europe is ok with it all, thats the real issue here, not wether Russia is heading for “recession” if we label finacial terrorism as “recession” then yes Russia is.
http://www.affaritaliani.it/esteri/russia-luttwak1612.html
Great opportunity for Europe. Have we a project ready? Like this: http://www.losio.com?
Wake up!
Europe is hacked. It is a mere pawn for US to get to russia.
this europe is rotten
http://www.zerohedge.com/news/2014-12-14/germany-already-signaling-complete-economic-collapse-european-union
What is wrong with this? When an economy needs air to breathe, space to consolidate, time to rearrange things, the indicators the economists like so much may suffer, but that is just an economist’s shortsightedness in action, nothing else.
Can we just stop believing that the economists’ crystal balls are any better than any other crystal balls? Or less hazy?
Russia will be fine.
Russia is about to be reminded it lost the Cold War
The Russia this economic cooling all the crude oil price fall and international sactions are living in times of change we will wait for more details
EU SOU A FAVOR…..DUMA GREVE GERAL….NUNCA JAMAIS VISTA EM PORTUGAL…..PELO POVO…..E PARA O POVO…..SEM A PRESENA DOS FANTICOS OPORTUNISTAS E VENDIDOS DOS SINDICATOS……IGUAIZINHOS….AOS DEMAIS MEQUETREFES…. LOUCOS PELO PODER…..E A UNIO EUROPEIA FAZ JUZ…..COM O NICO OBJECTIVO……DE SUGAREM O POVO TRABALHADOR….CUMPRIDOR……TODOS….PRODUZIMOS…..O MAL…. QUE ESSES PROSTITUTOS POLTICOS……VENDIDOS A SEITAS FANTICAS……ABITUADOS NO BAIXAR AS CALAS…..E J BEM UNTADINHOS (COMO GOSTAM )……GOZAM DE PRAZER MRBIDO….. UMA BOA PANORMICA….PARA UM PAS GOVERNADO POR PEDERASTAS…..PEDFILOS…..LADRES…..VIGARISTAS…..PROSTITUTOS…..QUE IGNORARAM SEMPRE….O VERDADEIRO SENTIDO DA PALAVRA: PATRIOTA……. “Patriotismo, do grego patrites (patrcio), o sentimento de orgulho, amor1, e devoo ptria, aos seus smbolos (bandeira, hino, braso, vultos histricos, riquezas naturais, e patrimnio material e imaterial)2 . razo do amor dos que querem servir o seu pas e ser solidrio com os seus compatriotas”…..ENFIM…..SOMOS AQUILO QUE TEMOS DEIXADO….QUE SEJAMOS……UM BEM HAJA……PORTUGUESES VENDIDOS……..PORTUGUESES DE MERDA…….SOIS…..TAL QUAL…..UM REBANHO DE CABRAS E CABRES……POIS TUDO NA VOSSA VIDA…… PERMITIDO…….pois assim…..o PERMITEM VOS…….https://www.youtube.com/watch?v=wuCdlhCNkvk
@Vera Santos
Hmm, Portuguese? What’s so special about said language compared to English, French, German or Spanish?
“And who is it tacking with it?”
And this makes you happy Europe ? Don’t laugh too loud, you may be next.
May the warmness be with eu during winter times without Russian gas
The Russian population may soon lynch the whole corrupt putin gang right in Red Square. Putin and his droogs have never cared for anybody, including Russian citizens. It is time for Russia to wake up and enter the new millennium. Even the Asian countries understood that communist aggression will accomplish nothing. Russia has remained stagnant. They produce nothing that is of any significant value. With all that land mass, they cannot even feed themselves. The population is tired of their leaders and the few friends living in luxury, while the rest of the country can barely put food on the table.
Gees… so bloodthursty ! Nope, lynching is not in Russian style. More likely Russians will deal with it the same way they dealt with the 90s crisis – tighten the belts, re-envent themselves and their economy.
Yes
-5%
no russia is beign pushed for recession, but soon the chinese will take over wait and see…keep provoking
Well, Russia may not meltdown, yet it will soon be sold to China and India!
No
If russia collapses it will drag the eu with it. Russia owes billions to european banks and a default would bankrupt europe. In my opinion europe is already bankrupt anyway.
This is just the americans/saudis and the rest of the oil cartel/banksters trying to grab russian oil/gold/gas by trying to create unrest, just like in ukraine.
These psychopaths will stop at nothing, its money for nothing, we pay for it with our taxes and they fill their pockets. Scam?
The removal of putin is underway or at least an attempt, and the installation of a puppet regime whom will do the bidding of the banksters is almost certain.
Wow deja vu, sounds like were going through the same thing in europe.
Removal of goverments is a specialty of the cartels, look at europe, almost all goverments have been turned into a sniveling whining usless bunch of pocket filling career wolves which do nothing more than transfer funds to brussels for (the big cause). Themselves!!
I will celebrate the day the eu project crumbles and it will….and i will gladley wipe something with the eu flag.
Russia is no cinderella when it comes to cartels running the show, but the americans wrote the book.
The only good american politician is one behind bars…
And no russia will not melt down, it wont be allowed to $$.