World press on Russian economy (December 11, 2014)The Central Bank of Russia raised its key interest rate on Thursday in an effort to curb inflation. World press discusses Russian economy and its future."Falling oil, rising cucumber prices: how much trouble is Russia in?" is an article published today by the Guardian. According to the article, the South Stream project was halted because of money issues: "The $40bn project was always driven more by a political rationale than a business case. The influence that would have flowed through the pipeline was more important than the gas it would have carried.""Russia’s attempts at hedging falling oil prices and sanctions have so far included increasing energy exports to Asia, a plan to ship gas through Turkey, which has been dubbed as unrealistic, and a gold buying spree. In the bigger scheme of things, these measures, at least in the short-term, have limited impact and are at best speculative," the article reads.According to the newspaper, one the main consequences of the falling of the ruble is the increase of Russia's external debt: "Russia’s external debt amounted to $731bn in June 2014. 74% of this is denominated in foreign currency, meaning that the depreciation of the rouble makes it more expensive to repay. $35bn of debts are due in December alone.""The one parallel with the 1998 crash is that some of the Russian economy’s greatest vulnerabilities to a weaker currency lie in the banking sector. Capital Economics calculates that banks alone have $192bn external debt (about 10% of GDP), up from $170bn in 2008, and from $18bn in 1998.""Despite all this, figures at hand, while it won’t be pretty, Russia can cope with the current context through next year. Should today’s scenario remain unchanged over the next two years or more though, then even the country’s hefty reserves may begin to struggle. In terms of external debt, credit rating agency Moody’s even gives this potential challenge a number: $112bn over the next four years," the article sums up the prospects of Russian economy."It may not be 1991 or 1998 all over again for Russia, but today’s financial misfortune means that several of Putin’s tools of economic control and influence will now be less sharp - and over time, if sustained, the political implications of this may come to matter just as much. Despite the president’s necessary ramblings against the west during his latest state of the nation speech, there are already hints of greater caution and prudence. Maybe even concern," the article concludes.
The Central Bank of Russia raised its key interest rate on Thursday in an effort to curb inflation. World press discusses Russian economy and its future.
"Falling oil, rising cucumber prices: how much trouble is Russia in?" is an article published today by the Guardian.
According to the article, the South Stream project was halted because of money issues: "The $40bn project was always driven more by a political rationale than a business case. The influence that would have flowed through the pipeline was more important than the gas it would have carried."
"Russia’s attempts at hedging falling oil prices and sanctions have so far included increasing energy exports to Asia, a plan to ship gas through Turkey, which has been dubbed as unrealistic, and a gold buying spree. In the bigger scheme of things, these measures, at least in the short-term, have limited impact and are at best speculative," the article reads.
According to the newspaper, one the main consequences of the falling of the ruble is the increase of Russia's external debt: "Russia’s external debt amounted to $731bn in June 2014. 74% of this is denominated in foreign currency, meaning that the depreciation of the rouble makes it more expensive to repay. $35bn of debts are due in December alone."
"The one parallel with the 1998 crash is that some of the Russian economy’s greatest vulnerabilities to a weaker currency lie in the banking sector. Capital Economics calculates that banks alone have $192bn external debt (about 10% of GDP), up from $170bn in 2008, and from $18bn in 1998."
"Despite all this, figures at hand, while it won’t be pretty, Russia can cope with the current context through next year. Should today’s scenario remain unchanged over the next two years or more though, then even the country’s hefty reserves may begin to struggle. In terms of external debt, credit rating agency Moody’s even gives this potential challenge a number: $112bn over the next four years," the article sums up the prospects of Russian economy.
"It may not be 1991 or 1998 all over again for Russia, but today’s financial misfortune means that several of Putin’s tools of economic control and influence will now be less sharp - and over time, if sustained, the political implications of this may come to matter just as much. Despite the president’s necessary ramblings against the west during his latest state of the nation speech, there are already hints of greater caution and prudence. Maybe even concern," the article concludes.
