Tag Archives: Russian Oil exports

The Russian Economy slows…

Oil prices have dropped and the Sanction by America and Europe connected to the Ukraina , have bitten into the Russian economy….

Will this bother Russian leader Putin?

Russians are experiencing the first sustained decline in living standards in the 15 years since President Vladimir V. Putin came to power. The ruble has fallen by half against the dollar, driven by the plunging price of oil, the lifeblood of Russia’s economy. As a result, prices of imported goods have shot up, making tea, instant coffee, children’s clothes and back-to-school backpacks suddenly, jarringly expensive.

Making matters worse are the retaliatory bans that Russia placed on food imports after the United States and the European Union imposed sanctions for its actions in Ukraine, a policy that took a turn for the weird this month when the government destroyed thousands of tons of what it said were illegally imported foodstuffs including cheese and peaches.

The reduced supply means that what remains costs more, even if it is locally produced. Russians are paying a third more for sunflower oil, a fifth more for yogurt and three-quarters more for carrots compared with a year ago, according to government statistics. (The Western sanctions, for their part, have driven up the cost of borrowing for Russian companies, but they have not had a direct role in the inflation that is raiding Russian pocketbooks.)

Inflation has reduced the purchasing power of Russian wages by more than 8 percent in the second quarter, compared with the same period last year, according to figures published by Russia’s Central Bank at the end of July. And in a sign that the worst is far from over, the economy contracted by a steep 4.6 percent in the second quarter, compared with last year, and officially entered its first recession since 2009.

“It’s horrible,” said Elena Shcherbakova, a 47-year-old shoe saleswoman whose income, based in part on commissions, has fallen nearly a third since last year. She says she now shops at discount supermarkets, buys the cheapest kind of sausage and carefully counts containers of yogurt instead of throwing them into her cart by the handful the way she used to.

It is not clear what, if anything, this means for Mr. Putin. The trouble pales in comparison with the turbulent 1990s, when people’s wages went down by nearly half. Russians have an immense capacity for stoicism, and ubiquitous home gardens make budgets more flexible. Mr. Putin’s popularity ratings have remained high since last year’s annexation of Crimea, which was wildly popular among Russians…..

More…

Share on Facebook