The situation in Russia is not developing in the best way. Despite the temporary lull, and in some places the improvement of the situation, analysts and economic experts do not cease to argue about the impending next wave of the crisis. Both businessmen and ordinary people live in anticipation of an improvement in the situation and the period when the crisis in Russia ends. According to the Minister of Economic Development of the country Alexei Ulyukaev, the situation will stabilize in 2016. He argues that the long-awaited economic growth will replace the protracted recession. Unfortunately, far from all leading experts adhere to this opinion.
What is stabilization in Russia associated with in 2016?
The forecast of Ulyukaev and several other experts regarding the improvement of the situation in the country by 2016 has a direct connection with the international oil market. According to preliminary estimates, by the end of 2015, the ruble should radically strengthen its position against the backdrop of a global rise in oil prices. Inflation should decline to a rate of 2-2.5%. Stabilization is expected due to the planned increase in the level of consumption and stimulation of investment. At the moment, according to the minister, the Russian government is taking active steps to attract foreign investors to major projects in the automotive industry. As for the budget deficit in 2015, the announced figure corresponds to 2-3 trillion rubles in theory. In fact, everything looks different, which, in fact, puts such optimistic assumptions in jeopardy.
“The crisis in Russia is ending” - the fact that the price of oil at the level of $ 90 per barrel was included in the 2015 budget and in the preliminary budget plan for the next three years is doubtful in this statement. Today, the price of fuel has hardly reached the mark of $ 55. The lack of funds is obvious, therefore, the budget deficit will increase in the next three years, which makes it impossible to quickly overcome the crisis.
Optimistic outlook
When the crisis in Russia ends, the economy begins to experience its recovery. It has always been so, for crises are unfortunately not uncommon. Improvements are felt in almost all sectors, the country's citizens are raising their standard of living. But it’s too early to talk about this today. Of the most optimistic forecasts, it is worth noting those that say that it is impossible to avoid recessions in the way of establishing a powerful economic system. Crises are the forerunners of a rapid development spurt. They serve as a tool to eliminate contradictions. The lower a country falls, the more effective its further prosperity will be.
The analogy with 2008
In 2015, everything is far from being the same as it was in 1998. After the rapid fall of the 1998 ruble, foreign goods began to be actively replaced by domestic products. This only stimulated the internal development of the state. Domestic industrial production has gone so far that the echoes of a favorable environment made themselves felt back in 2000. Today, despite the fall of the ruble, domestic industry and production have not intensified. And instead of lifting, you can observe a completely opposite situation. The government has not yet taken any active measures to eliminate the circumstances, which automatically suggests that there is no need to wait until the transition period when the crisis in Russia ends and dawn begins.
Russia today. What to expect?
Looking at Russia today, one can clearly see the dominant components of the crisis:
- A sharp decline in industrial production.
- Ruble devaluation.
- The crisis in the banking industry.
It follows from this that it is too early to talk about when the economic crisis in Russia will end. No one gives any guarantees that difficulties will not extend to other sectors of activity. Many associate the deterioration of the economy only with external factors, although in fact industrial production began to slow down in 2012. It was during this period that the Ministry of Economic Development proposed three options for the development of further events until 2030. In 2015, you can observe the implementation of the most negative option. There was no modernization of the Russian Federation, the only engine for development remains the development and sale of energy, a stable decline in GDP, and proximity to a recession. An interesting fact is that the government was aware of future circumstances back in 2013, when it, without publicizing, adopted the third negative option for the development of the country's economy.
What measures does the government take and how does this help in a crisis?
Few experts undertake to answer exactly when the crisis in Russia will end. Moreover, the prerequisites for its appearance have appeared for a long time. So, in 2013, the government began an active revocation of licenses from banking and credit organizations. The decision by the end of 2014, after the dissemination of information about it, entailed a sharp outflow of capital. People actively began to withdraw funds from their accounts, which only exacerbated the situation and led to the bankruptcy of many financial institutions.
Crisis and sanctions
After the sanctions in 2014, circumstances worsened. And counter-sanctions from the Russian Federation and the fall in oil prices on the world market almost completely nullified attempts to restore the country's economy. Separately, we can say about the sanctions that led to higher prices for products. The business was unable to operate without margin, which led to an increase in prices to a level not rising for the average resident of the country. Reduced demand led to the closure of enterprises. The tandem of external and internal factors led to a reduction in business activity and to a decrease in demand in all segments. It’s too early to say how and when the crisis will end in Russia, since recovery will begin with an increase in the standard of living of people.
What do astrologers say?
Not ignored the urgent issue of the crisis and famous astrologers. Pavel Globa calls not to be afraid of default in 2015. Despite the disappointing forecasts, the astrologer focused on the fact that the euro will not exceed 100 rubles, and the complete elimination of the situation will take place only in 2017. Other clairvoyants do not answer the question of when the crisis in Russia will end. Predictions of the majority indicate a positive outcome for the state and unfavorable for America and Ukraine, and nobody really knows if this will be so.
What led to the crisis?
It is too early to talk about whether the crisis in Russia has ended. For this to happen, you need to resolve the root causes of the problem. This will be the first step towards the welfare of the state. Many rely on sanctions from America and Europe, although this fact did not have a dominant effect on circumstances. He simply left a negative imprint on the state of the economic market. Reduced investment by non-residents from the manufacturing sector worsened the competitiveness of domestic goods in the international market. The inflow of capital cannot be restored until the country is in decline. The complete dependence on trade in raw materials shook the economy due to the fall in world oil prices, the restoration of which to the previous level so far has not been indicated. The fall of the ruble to its historical lows and the parallel increase in the Central Bank of the Russian Federation interest rates led to the emergence of problems among the population. The conflict between Russia and Ukraine added fuel to the fire. None of the root causes of the problem at this stage in the development of Russia can be completely eliminated, which gives serious reasons to judge the early completion of the crisis.
What will happen next?
The development or recession of the economic crisis in Russia depends solely on the introduction of new sanctions, which may lead to the loss of businessmen’s control over their foreign capital. State isolation cannot be avoided. The outcome of events will be noticeable at the end of March 2015, but for now the situation is static, and businessmen have to look for new ways of their development. No changes are foreseen in connection with the situation on the world oil market. With an asset fuel price of $ 55, you should not expect positive changes. The complete lack of business support from the government is far from the best. If we compare the situation with 2008, the similarity can be seen only in the oil market price environment. In all other respects, there are differences, especially in areas that are in decline: real estate, the banking segment, and manufacturing. While the sanctions are intensifying, and the oil market is stagnant, it is too early to say when the crisis in Russia will end. Predictions with a positive connotation indicate the development in the field of IT technologies, telecommunications and pharmaceuticals. Given the small percentage that these segments occupy in the economy, the global improvement of the latter is still out of reach.
The most pessimistic forecast
Among the numerous forecasts, there are the worst-case scenarios for the country. It is likely that by the end of 2015, most of the financial institutions of the state, including those forming the financial system, will simply go broke. This will happen due to the growth of the dollar to 80 rubles. At the same time, the price of oil will drop to $ 40 per barrel. Financial changes in GDP reached 10% in the red. The Central Bank will be forced to raise the interest rate from 17% to 37%. As a result, the countries of the world will refuse to lend to Russia, which will cause a complete collapse of the state financial system. The situation will not even allow you to think about when the crisis in Russia will end. Predictions, even the best ones, will not change anything.
Last year, Russia kept GDP growth at 0.5%. An indicator of 4% already in 2015 is quite real, and if we compare it with a further drop in oil, the pessimistic forecast will no longer seem so unrealizable.
It all depends on the government
In the current situation, only the Russian government is able to determine when the crisis in Russia will end. Forecasts are useless, as the variability of the situation is determined by the country's leadership. For example, if the Central Bank of the Russian Federation lowers its key rate, which is simply unrealistic, this will cause high inflation. At the same time, the credit market will remain unscathed. The fall in GDP will be kept within 4%. Competent management decisions can lead the country out of crisis only if the cost of oil rises to $ 60. Within 2-3 years it will be possible to achieve stabilization of the situation, provided that investment in the domestic economy of the country is at least 3 trillion rubles. Whether the domestic government will take such a step, no one can say.
