By Vestnik Kavkaza
The western sanctions which were launched for the first time in March 2014 still influence the Russian economy, blocking access of Russian companies and banks to the external capital market, according to Fitch agents. They predict that in 2015 the GDP of Russia will fall by 4%, inflation in Russia will be 8.5% at year-end, while the growth of the Russian economy will revive no earlier than 2017.
Meanwhile, a former economist and Director of Studies at the International Monetary Fund, a professor of economics at Harvard University, Kenneth Rogoff, thinks that even though oil prices became the main factor which damages Russian economy, the situation is not unique to Russia: “It is a kind of a global phenomenon. Probably the main factor is the situation over the slowing down of Chinese economic growth, as well as “the shale revolution” in the U.S.A., which influences the balance of the oil demand and supply.”
The Organization of Economic Cooperation and Development publishes a report on economic and energy prospects every year. According to Rogoff, “it predicts low oil prices as a new permanent situation.”
The expert notes that it's not the whole world that is losing out due to low oil prices: “Of course, the European Union benefits from the situation, as well as Japan. On the other hand, oil exporters such as Venezuela, Mexico and Norway will suffer.”
The recovery of Russia after the crisis could take several years, Rogoff thinks. “If we look at the banking and financial crises which have been taking place in recent decades, on average it takes 6-8 years to overcome the consequences of a crisis in the financial sector. As far as I understand, the situation in Russia will sooner or later influence the national financial sector as well. It takes a lot of time to break even, to step up to a previous level from which the country has fallen.”
At the same time, Rogoff thinks oil prices could probably return to the level of $100 per barrel. “If oil prices begin to grow, the consequences of the crisis will be softer and a way out will be easier. If prices remain at the current level, structural reforms will be needed. And it will take a lot of time,” the expert thinks.
