Russian economy cannot wake up from nightmare
The Russian Economic Development Ministry's report titled "Russia 2015 Socio-Economic Developments" and the data released by the official Russian statistics office, Rosstat, reveals that the volume of the country's retail sector shrank 10 percent in 2015 compared to the previous year - pointing to the worst performance that the sector displayed since 1970. Russia did not even experience such a large fall in the retail sector during the economic crises that prevailed in 1998 and 1999.
As the poor, who spend most of their earnings on food, are negatively affected by food sanctions that Russia imposes on many countries, food sales experienced a fall as well. In response to the sanctions that Russia faced due to its acts in Ukraine, the country decided to impose embargoes on the United States and many European countries. Russia also stopped the import of some food products from Turkey in response to Turkey's downing of a Russian military jet that violated its airspace in November 2015.
Annual consumer inflation soared to 15.5 percent in Russia last year. Another critical problem in the country is the rise in the poverty rate. Last year, the poverty threshold in the country was determined to be $120, and the number of people who lived below the poverty threshold increased 13 percent. The percentage of people who lived on the poverty line was 10.8 in 2013 and 11.2 in 2014.
According to a news report published in the Russian daily Kommerstant, the total amount of cash held by the Russian public has decreased for the first time since the 1998 economic crisis. In 2015, the Russians spent more than what they earned, and their expenditures exceeded their revenues by $5.5 billion. Experts stress that the Russians are concerned about the course of the economy; therefore, some Russians are increasing their savings to buy bonds with foreign currencies and bank deposit investments. It is said this attitude is accelerating the fall in the overall amount of consumption in the country.
According to another Russian daily, Vedemosti, the Russian Finance Ministry predicts that the recession in the country's economy might persist at least over the next 15 years if the required reforms are not realized and oil prices do not increase. Predictions suggest that the Russian economy is expected to shrink 0.8 percent this year and re-achieve a growth trend again in 2017. This being the case, Russia will only be able to achieve the gross domestic product (GDP) level of 2014 once again in 2020. It is estimated that real wages, which have dropped by nearly 13 percent since last year, can reach the 2014 levels only in 2025.
As the poor, who spend most of their earnings on food, are negatively affected by food sanctions that Russia imposes on many countries, food sales experienced a fall as well. In response to the sanctions that Russia faced due to its acts in Ukraine, the country decided to impose embargoes on the United States and many European countries. Russia also stopped the import of some food products from Turkey in response to Turkey's downing of a Russian military jet that violated its airspace in November 2015.
Annual consumer inflation soared to 15.5 percent in Russia last year. Another critical problem in the country is the rise in the poverty rate. Last year, the poverty threshold in the country was determined to be $120, and the number of people who lived below the poverty threshold increased 13 percent. The percentage of people who lived on the poverty line was 10.8 in 2013 and 11.2 in 2014.
According to a news report published in the Russian daily Kommerstant, the total amount of cash held by the Russian public has decreased for the first time since the 1998 economic crisis. In 2015, the Russians spent more than what they earned, and their expenditures exceeded their revenues by $5.5 billion. Experts stress that the Russians are concerned about the course of the economy; therefore, some Russians are increasing their savings to buy bonds with foreign currencies and bank deposit investments. It is said this attitude is accelerating the fall in the overall amount of consumption in the country.
According to another Russian daily, Vedemosti, the Russian Finance Ministry predicts that the recession in the country's economy might persist at least over the next 15 years if the required reforms are not realized and oil prices do not increase. Predictions suggest that the Russian economy is expected to shrink 0.8 percent this year and re-achieve a growth trend again in 2017. This being the case, Russia will only be able to achieve the gross domestic product (GDP) level of 2014 once again in 2020. It is estimated that real wages, which have dropped by nearly 13 percent since last year, can reach the 2014 levels only in 2025.
Last Update: February 16, 2016 21:33