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Page added on March 16, 2018
Russia’s economy : still dependent on oil
After two years of recession caused by lower oil prices and western sanctions, Russia’s recovery benefits Vladimir Putin as he seeks a new term in office. However, this improvement won’t last long without structural reforms. EURACTIV.fr reports.
Russia’s economic recovery is timely for Vladimir Putin, following a 15% peak in 2015, inflation fell last year to 3%. As for growth, it is slowly recovering after a -3.7% dive in 2015, with a 1.5% growth in 2017 that should be followed by another 1.8% expansion in 2018.
Rating agencies raised the country’s credit rating at the end of February and forecast a stable future. S&P’s rating for the country, therefore, upgraded it from the so-called “junk” or speculative category. Behind this return to stability, there is a strong link between the rouble and oil: as the rise of the price of black gold is the main reason for this upgrade.
“The situation plays in the country’s favour, looser fiscal policies allowed it to implement child benefits, aid for low-income households and other benefits facilitated by the rise in oil prices,” said Dominique Fruchter, an economist at the French Insurance Agency for External Trade (Coface).
Dependency on oil
If the rise in oil prices gives Vladimir Putin a certain leeway, Russians are now expecting more from him on the economic front.
Even if he is as popular as ever, the president cannot rely on the success of Crimea’s annexation or on the strong economic performance of his first two mandates (2000-2008), where growth reached around 7%.
“He still believes he has a certain margin, but not forever. Russians are tired of his international activism, he will now have to act on the economic front,” said Fruchter. “Prices should not drop again. If they stay at the current level, he will have the means to reform, especially the manufacturing sector.”
The next few years will depend on the country’s ability to free itself from its dependency on hydrocarbon revenues, as they currently generate 30% of the country’s GDP and 50% of the state budget. Moreover, public accounts show little deficit, according to Coface, the deficit will fall to 1.5% in 2018, however, when excluding hydrocarbon revenues, public deficit would rise to 7% of the GDP.
All that’s left to see now is whether Vladimir Putin will take advantage of his next six years as president to implement major economic reforms. In his 1 March speech, he showed that social and economic reforms were far from being his main priority, concentrating more on military and strategic issues. And the rise in oil prices will most likely not push the Kremlin towards reforms.
Risky environment for business
In terms of risk assessment, Coface gives Russia a B, which means the risk is quite high for the business world.
The business environment in the country is marked by state interventionism and corruption. Since his rise to power, Putin has developed a new kind of capitalism: state capitalism, 70% of the Russian economy nowadays is state owned. “When company heads are following the state, all is well, but if they don’t, then they can be prosecuted,” said Fruchter.
Such an environment causes the distrust of investors both inside and outside the country in regards to the sustainability of the Russian economy.
euractiv
65 Comments on "Russia’s economy : still dependent on oil"
Davy on Sun, 18th Mar 2018 3:57 pm
Weasel, is that the best you can do? Did mom make you clean the basement that reeks of old food and dirty underwear this weekend? Add to that nastiness your cum rag because we know your significant other is your 5 friendly fingers. Go back on your Xbox live and raise Kane with your other waste case millennials.
Cloggie on Sun, 18th Mar 2018 4:05 pm
Meathead gets a pat on the back and seal of approval of his owner millikike/apneaman. The same millikike who keeps on gloating how “stupid fat whitey” (that would include davy) is being sidelined and directed to the exits of history. Does meathead revolt? Of course not. For a revolt you need a spine, something rubber Stockholm Dave entirely lacks. Davy boy needs confirmation from those who want him dead. I have never seen a more despicable characterless individual than meathead. You can have him as your personal slave, millimind.
GregT on Sun, 18th Mar 2018 4:08 pm
“Greggie, go be useful for your wife and walk the dog. After that go play in your little greenhouse. That is my advice for you buddy.”
Thanks for the advice Davy, but I already took the dog for an 8K walk early this morning. Sorry, my bad, that would be equivalent to about 5 miles in that antiquated and outdated British Imperial system, that not even the British use anymore.
Too early for the greenhouse, and the wife is helping me by picking rocks. We just cleared a bunch of land the week before last.
Hope you’re having a wonderful day buddy, it’s sad to see you being so miserable all of the time.
Davy on Sun, 18th Mar 2018 4:26 pm
Nederdummy, I have no clue what you are rambling on about. Geeze, you are losing it.
Kat C on Sun, 18th Mar 2018 4:26 pm
Davy, I am not at all new to this. Starting in 2001 I did years on Jay Hansen’s Dieoff blog, spent time on AlasBabylon in its better days. Etc Etc. I get tired of the endless back and forth so I quit for a while, but occasionally I dip my toes back in the waters.
Its still very simple as it always was. Living creatures need energy and minerals. Most get it from a thing called food. Without it they die, with it they can do stuff, mostly get more energy, eat, work, repeat. Then they started getting extra energy, they harnessed fire and got more energy from their food. They domesticated animals and got more work done. At the founding of this country 10 farmers fed 11 people, in other words for each 10 farmers, 1 person could do something other than farming. Now thanks to ancient stored sunlight in the form of fossil fuels 1 farmer can feed 80 people freeing them up to do other stuff like paint fingernails, and make movies. When we have used up the ancient sunlight energy we will be back to current use, which might seem like OK we go back to being hunter gatherers, EXCEPT that in the process we have released back into the atmosphere all the sequestered CO2 in those fossil fuels. So we are headed to an end permian type extinction as detailed in the book “When Life Nearly Died” https://www.amazon.com/When-Life-Nearly-Died-Extinction/dp/050028573X Except that along the way using our ancient sunlight inheritance from the past, so of those 80 people per one farmer who didn’t have to farm figured out how to split the atom. And so now our end permian will be covered with radioactive dust from 400 Chernobyls and WWIII.
This may have been discussed before on this site. I certainly have discussed it for 17 years on various blogs that had somewhat more intelligent discussion than most here. There appears to be no moderation, so personal insults make up a large percent of the comments. It would seem however that a goodly number here don’t get it. It doesn’t matter if they don’t get it, what will be will be. From time to time I just choose to blog again for a while. Passes the time before the clock runs out.
For those not at ground zero when the nukes start falling, life will return to simple…find food, eat food, find food, eat food until you don’t find food, don’t eat food and die. That is what goes on for every other species of the planet and in fact that is what is going on for humans right now, we just can’t see it for the excess. Sorry if I am repeating stuff but the insults here have also been repeated on blog after blog after blog. The crap views get repeated here over and over again. So I feel I have a right to repeat the simple truths that will become apparent to everyone when the crash comes (barring disappearing in a flash of nuclear blast, or being taken out early when civil society breaks down).
Not cocky, condescending. Women are used to that. I can and have indulged in name calling and I can sling with the best of them. But that isn’t entertaining for very long. Lecturing on simple truths is more fun. Admit it no one is here blogging to change the world, or even anyone’s opinion. You all do it because you enjoy it, whether is is trying to prove someone wrong, or just have an excuse to rant. The testosterone is showing as it does on most male dominated blogs.
Davy on Sun, 18th Mar 2018 4:30 pm
greggie, try running it boost the heart rate more. I just got done running a 4K.
Cloggie on Sun, 18th Mar 2018 4:56 pm
“Clogmeister, I have no clue what you are rambling on about”
I have always known that you are not the brightest bulb in the christmas tree.
Never mind, you are a good guy, there is nothing wrong with you, it is not your fault.
Davy on Sun, 18th Mar 2018 5:00 pm
Kat C, we enjoy our mud slinging or we would leave. In between the mud slinging we deal with some important issues. You have to be here consistently to find the tasty morsels.
I didn’t want to sound condescending. I guess I was a hardcore doomer like you years ago and I evolved. I know complete collapse could happen at anytime but what interest me is the subtleties of the here and now. Life is too short to write it off as useless because we are all going to die.
Anyway, I am glad you are here. You add much needed seriousness and sobriety. You avoid the turf wars and show respect. We need more like you and less of us uptight asshole white men.
Kat C on Sun, 18th Mar 2018 5:21 pm
Davy thank you, but I am probably going to bug out soon. Spring is coming and it is more entertaining to watch things grow. Two hens are setting on eggs and it is more entertaining to watch momma hens with chicks.
If the whole thing is not useless and there is something to be done, spending time on this blog is a waste. Deep down you know it is useless or you wouldn’t waste time here. When was the last time you convinced anyone here of anything???
We are all going to die, but it looks extremely likely we are all going to go together when we go. https://www.youtube.com/watch?v=frAEmhqdLFs (note in the song the number to go together is 3 billion….) So not only are any efforts we make useless, the whole human experiment is useless. However on the small, when we hug someone we love, do a kind deed, etc we are useful to that person in that little piece of time.
The sooner we all go extinct, the sooner fear of death disappears. If everything with central nervous systems go extinct, pain will disappear. Extinction is quite useful if ending pain and fear is an objective. I am not a doomer because I don’t consider extinction a doom, but rather a blessing.
In the meantime I like to argue a bit about the details of how it all plays out. So this blog is useful to me as a way to pass time at the end of winter…
Kat C on Sun, 18th Mar 2018 5:26 pm
PS Davy if it weren’t for you and a few others I wouldn’t even look at this blog. You obviously have a lot of knowledge and good sense. The nasty back and forth by others tends to bring out my smaller dose of testosterone some time 🙂
Cloggie on Sun, 18th Mar 2018 5:36 pm
One hour ago: upbeat Vladimir the Great celebrating victory in front of a crowd, in a Moscow ravaged by global warming.lol
https://youtu.be/C_K48euMQNw
Six more years opportunity for Kunstler to make fun of the infantility of Washington officialdum:
http://kunstler.com/clusterfuck-nation/drums-along-potomac/
…and perhaps to overview the downfall of the last president DJT of European-America and following chaos.
Davy on Sun, 18th Mar 2018 5:53 pm
Kat C, yea, I got chickens too. Goats just had kids and the cows calves. Everything is about ready to start budding. I pruned the orchard and grapes. Got the garden fertilized. I am getting my field burning equipment ready. As far as this blog, I enjoy it here. If you stay around long enough new people show up. I don’t take this stuff too serious anymore. I have all the doom training needed to understand enough. I have been dooming since 2000. Don’t weaken!
Kat C on Sun, 18th Mar 2018 6:23 pm
Davy Our animals keep us somewhat sane….and ground us in reality. Glad you have lots!
GregT on Sun, 18th Mar 2018 8:27 pm
“You obviously have a lot of knowledge and good sense.”
Without a doubt, one of the most clueless posts ever on this board.
Anonymouse1 on Sun, 18th Mar 2018 8:50 pm
The exceptionalist has been working on his make-believe farm for as long as anyone here can remember. His ‘farm’ is like controlled fusion, its always a few years away in the future. This perpetual lack of progress is easy to understand, given his days consists of endless lunacy laced diatribes @ PO.com, along with rambling walls of text no one reads. His post frequency alone precludes little time for ahem ‘farming’. It not even clear he even sleeps anymore. And that is before you take into consideration, he is totally unhinged and probably couldn’t work a ‘farm’ even if he actually got up from his computer for any length of time to try to do so.
He can rage like a pro though.