Russia’s economic crisis: five key charts
Russia and its president, Vladimir Putin, have been left out in the economic wilderness as sanctions imposed by the west, a tanking oil price, and plunging rouble take their toll. Here are five key charts.
Growth in Russia is slowing rapidly
Russia’s economy has been hit hard by falling oil prices, with tension over the conflict in Ukraine undermining investor and consumer confidence. Growth fell sharply to 1.3% last year from 3.4% in 2012. The International Monetary Fund is forecasting growth of just 0.2% this year. In early December, deputy economy minister Alexei Vedev said low oil prices and the impact of western sanctions would push Russia into recession next year. The ministry slashed its forecasts, predicting the economy will shrink by 0.8% in 2015, compared with its previous expectation of 1.2% growth.
Oil prices have almost halved
Russia’s economic health is heavily dependent on the price of oil, which accounts for about 70% of its exports. Moscow needs an oil price in the region of $100 a barrel to balance its budget. The central bank has warned the economy would contract by about 4.5% next year of the oil price remains at its current level for the next 12 months. The price of Brent crude has almost halved since the summer, from $115 a barrel to just below $60.
The rouble has fallen off a cliff
Faced with mounting uncertainty over the immediate future of the Russian economy, investors have been piling out of the rouble. As a result – and as the chart above so clearly shows – the rouble has fallen sharply against the dollar, hitting record lows against the US currency. The central bank’s attempt to stem the losses, by raising interest rates (more below) failed. However, the rouble surged 10% against the dollar on Wednesday after the bank announced fresh plans to pump money into the banking system.
Interest rates have been hiked to 17%
In a drastic attempt to stem the rouble sell-off, Russia’s central bank raised interest rates to 17.5% on 16 December, from 10.5%. It was the biggest one-day increase since the 1998 financial crisis that plunged Russia into recession and shook stock markets around the world. Rates started the year at 5.5%. Sergei Shvetsov, deputy governor of Russia’s central bank, admitted it was a decision the bank would rather not have taken, describing it as a choice between “the very bad and the very, very bad”.
Russian inflation is above 9%
While other central banks are faced with low inflation – and in some cases the prospect of deflation – Russia’s inflation rate is above 9%. Consumer price inflation increased to 9.1% in November from 8.3% in October. The price of oil, Russia’s main export, has plunged, while the weak rouble has pushed the cost of imports up.
Source: the guardian – Russia’s economic crisis: five key charts