Economy
of Russia and Economic Crisis
After the
breakup of the USSR, Russia's first slight recovery, showing signs of
open-market influence, occurred in 1997. That year, however, the Asian
financial crisis culminated in the August depreciation of the ruble. This was
followed by a debt default by the government in 1998, and a sharp deterioration
in living standards for most of the population. Consequently, 1998 was marked
by recession and an intense capital flight.
Nevertheless,
the economy started recovering in 1999. The recovery was greatly assisted by
the weak ruble, which made imports expensive and boosted local production. Then
it entered a phase of rapid economic expansion, the GDP growing by an average
of 6.7% annually in 1999-2005 on the back of higher petroleum prices, a weaker
ruble, and increasing service production and industrial output.
Russia remains
heavily dependent on exports of commodities (товары), particularly oil, natural gas, metals, and timber, which
account for about 80% of exports, leaving the country vulnerable to swings in
world prices. In recent years, however, the economy has also been driven by
growing internal consumer demand that has increased by over 12% annually in
2000-2005, showing the strengthening of its own internal market.
There has been a significant inflow of capital in recent years from many
European investors attracted by cheaper land, labor and higher growth rates
than in the rest of Europe. Amazingly high levels of education and societal
involvement achieved by the majority of the population, including women and
minorities, secular attitudes, mobile class structure, better integration of
various minorities in the mainstream culture set Russia far apart from the
majority of the so-called developing countries and even some developed nations.
The world economic crisis is manifesting itself primarily (в первую очередь) in the area of finance (destabilisation of stock markets,
bank losses, growing inflation, and rising interest rates). Following the
commercial crisis and the fall in demand on the American market, the crisis
spreads to the “new industrial countries”, where production starts coming to a
halt (остановка). The contraction (сокращение, decline) in sales and in world
industrial output leads to new collapses on the world’s stock (ценные бумаги)
markets and problems from inflation to stagflation (стагфляция). Oil prices are falling (plumping)
down, the number of unemployed is rising, and a massive decline in consumption
takes place.
For the present, the impact of the crisis on the economy of Russia
remains insignificant, affecting primarily the financial sphere. The economy of
the Russian Federation is continuing to grow, but the country’s consumer market
is under pressure from inflation. This is preparing the way for national
commercial and mortgage crises. The advent (приход) of the global crisis in Russia will be delayed, probably
occurring later than in the “new industrializing countries” and in the European
Community. The decline of world oil prices will lead to a crisis in Russia’s
national economy, to a collapse on the share (акции) market, to a fall in industrial production and an increase
in unemployment, to a strengthening of inflation, and to sharply reduced
consumption. The global crisis will be especially severe (жесткий) for Russia due to the orientation
of the country’s economy to raw materials exports. The emergence of the country
from the crisis will be associated with major structural changes in the
economy, with social unrest, and with a decline in the role played by the raw
materials corporations.
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