Economy of Russia in 2015

Economy of Russia in 2015.

Королева Е. А.,

Специальность "Мировая экономика"

Студентка ДЭМ-122б

Научный руководитель- Гулая Т.М.

What will happen with the Russian economy in 2015? Today this question is on agenda. The Ministry of Economic Development of Russia has revised its growth forecast of the Russian economy in 2015. The Russian economy will face serious changes. Deterioration in the forecast is related to the sanctions because of the events in Ukraine and geopolitical tensions.

Overall, the new picture of development of the country in the next year corresponds to a recent estimate made by the head of the Minister of Economic Development-Alexei Ulyukayev. He said that Russia is balancing between stagnation and recession.

Evaluation of the growth of retail trade decreased to 0.6% from 2.1%, real incomes – to 0.4% from 1.3%, real wages – to 0.2% from 1.9%. Gross domestic product may shrink 0.8 % in 2015, compared with an earlier estimate for 1.2 % growth, according to the Economy Ministry. Inflation will be higher. According to the Ministry of Economic Development, it will be 6.5% (previous estimate – 5%).There are two key factors affecting inflation: price growth associated with sanctions and the introduction of a sales tax at the beginning of 2015. Net capital outflows are set to surge to $125 billion in 2015, more than the $100 billion predicted earlier, according to the Economy Ministry. Russia has seen foreign direct investment shrink dramatically. This fact is indeed discouraging. Russia needs to take resolute action to attract more foreign investment. There will be also restrictions on the import and export of some products. Experts forecast a government deficit below 2% to 2020.

The ministry has not yet coordinated its adjusted inflation forecast with the Central Bank of Russia, which is currently revising its own estimates.

Russia's central bank has forecast zero economic growth for 2015 and only 0.1% growth for 2016, in a three-year monetary policy plan that underscored the damaging impact of Western financial sanctions on the domestic economy. It is expected that that Western sanctions against Russia will remain until the end of 2017. Also Russian ruble will lose the positions. It will have direct impact on the economy. Ruble has yet lost more than 40 % of its value since the beginning of the year. At the same time the blow to the ruble is unlikely to be as strong as it was, but it will be a prolonged one. The  forecasts recognised the two major external shocks to the Russian economy: falling oil prices and Western sanctions imposed over the Ukraine crisis.

Falling oil prices and geopolitical tensions have put intense pressure on Russia's currency, amid fears that its economy is heading for a recession. Prices have dropped over 25% since June, slashing the revenues Moscow received from energy exports.

Nevertheless, there is the possibility of economic development. In order to achieve economic growth the Ministry of Finance will have to develop new ways to replenish the state treasury. Most likely, the government will resort to tax increases, however it will not significantly change the situation. In response to the introduction of new tax liabilities and increase existing taxes, there will be a notable decrease in business revenue, it will cause development of shadow business and lack of tax assignments. So, this way will be ineffective. There are some another ways to save Russian economy:

1. In a statement of 5 December 2014 on the Kremlin website, Putin ordered bank recapitalizations by Feb. 1 and preparations for an amnesty next summer on capital returning to Russia.
2. Putin asked the central bank and the government to take “coordinated measures aimed at curbing speculative activities and preventing cases of manipulation on the Russian currency market.
3. Putin ordered the government to introduce a three-year supervisory “holiday” for small businesses.

We can see that the situation with the economy of Russia is not unique. There are still many obscure questions, therefore we cannot clearly answer the question: What will happen with the Russian economy in 2015? In general, Russia has entered a negative stage of the economic cycle. Economic winter is coming to Russia?

Список литературы:

1. http://russiatrek.org- Russian cities and regions guide, All about Russia in 12 articles.
2. http://www.ibtimes.co.uk-International Business Times.
3. http://www.newsnow.co.uk- World News.
4. http://bs-life.ru-Деловая жизнь.