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 (oiaa?u),
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 (a ia?aoth
i/a?aaeue) 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 (inoaiiaea). The contraction (nie?auaiea,
decline) in sales and in world industrial output leads to new collapses
on the world’s stock (oeaiiua aoiaae) markets and problems from
inflation to stagflation (noaaoeyoeey). 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 (i?eoiae) 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
(aeoeee) 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 (aeanoeee) 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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