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Russia’s Economy Entering 2-Year-Long Recession Amid Oil Prices Fall And Coronavirus Shutdown: Report

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Russia's Economy Entering 2-Year-Long Recession Amid Oil Prices Fall And Coronavirus Shutdown: Report

IMAGE: TASS/Eugeny Sofiychuk

The Russian economy has been suffering from the coronavirus shutdown and the drammatic fall of oil prices following the breakdown of the OPEC+ oil production pact and Saudi Arabia’s agressive actions on the oil market. The recent developments have shocked traders around the world and resulted in sharp volatility on the Russian stock markets leading to the fall of the value of the ruble.

Russia's Economy Entering 2-Year-Long Recession Amid Oil Prices Fall And Coronavirus Shutdown: Report

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In an address to the nation on April 2, President Vladimir Putin extended the economy shutdown (initially planned for March  30-April 5), ordering non-essential businesses to stay closed until the end of April. In fact, the government gave workers a month-long paid holiday and ordered ‘non-essential businesses’ to pay for this. The announcement came amid a wave of lockdowns across Russia imposed by local authorities that have already led to the administrative self-isloation of many regions.

On April 1, the Center for Macroeconomic Analysis and Short-Range Forecasting released a report providing a look at the expected consequences of the current situation. The main author of the analytical report is Dmitry Belousov, the brother of First Deputy Prime Minister Andrei Belousov. The report says that even in the non-crisis scenario based on a large-scale anti-crisis program, the Russian economy “is still likely to be faced with a high probability of a two-year recession,” corresponding to the length of the global economic downturn.

The analytical center says that the probability of this ‘constructive scenario’ involving the active state response to the crisis is 55–57%. The fall in the GDP will be kept at 2.3–2.5% in 2020 and 0.5–0.8% in 2021. Therefore, in the next two years, the Russian economy will decline by 2.8–3.3%. After the end of the crisis in 2022, the economy will return to slow growth: 0.6–1%. However, if the government does not employ active measures to contain the damage to the economy, the recession may turn out to be even deeper. If the government limits its efforts to a stabilizing policy only, in 2020 the GDP may fall by 3–3.3%, in 2021 – by 0.8–1%. According to the report, in both scenarios, it will be be difficult to avoid a jump in poverty or unemployment.

It should be noted that the report was released before a statement by US President Donald Trump claiming that Saudi Arabia and Russia will reach a new oil deal soon.

“Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!” Turmp wrote on Twitter on April 2.

The Trump statement and the following reactions by Saudi and Russian officials led to a temporary and limited growth in oil prices. However, by April 5, it appeared that the OPEC+ meeting planned for April 6 was rescheduled for April 9 indicating the contradictions among the sides involved. In particular, Russia says that US oil producers also must be included in the production cut off deal. Therefore, the energy market still remains unstable.

Russia's Economy Entering 2-Year-Long Recession Amid Oil Prices Fall And Coronavirus Shutdown: Report

Click to see the full-size image

The complicated economic situation appears to be also affected by political developments inside Russia. The coronavirus shutdown take place just before the expected nationwide referendum on the constitutional reform (widely criticized by the neo-liberal opposition, affilated with the West).

Modern “liberalism” (often called “neo-liberalism”) is the ideology of serving to global financial monopolies and market speculators in general. The goal of such “liberals” is to increase their personal level of consumption with the minimal possible intellectual and physical work, using the margin simplification of modern communications and IT technologies, for satisfying their selfish, mainly bodily, desires covering them under the guise of post-modern sophistry. Thus, they swallow public resources undermining the steadily development of the humanity.

It’s expected that after the end of the shutdown the Russian government will return to the process of the constitutional reform. The neo-liberal opposition and other destructive forces affilated with the West will likely seize the opportunity to launch a new destbilization campaign in the country.

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  • Rhodium 10

    Every year I read and hear the same thing about the bad Russian economy…and then they have large reserves of foreign exchange and gold….”GIve me Bread..and call me Fool”…..

    • Harry Smith

      Don’t know why, but SF always choose the most dubious analytics from inside of Russia.

      • Lone Ranger

        Indeed.

    • occupybacon

      Who cares about the roads, buildings etc, keep the gold

      • Harry Smith

        What’s wrong with roads and buildings?
        https://youtu.be/8iSBVIHCRdc

        • occupybacon

          Russia is small like Slovenia, they build a bridge and the country is fixed.

      • Rhodium 10

        Who cares about the roads if they dont have gold to pay me the salary?…

        • occupybacon

          So you get paid in gold?

          • Rhodium 10

            If you have gold…you have money…and you can eat!…if you only have roads.. the asphalt is not edible…

          • occupybacon

            What if I tell you that other countries have both?

          • Rhodium 10

            yeah sure..ask to one million US homeless that his country have gold and roads…

          • occupybacon

            I’d prefer to be homeless in US than having a house in Siberia

          • Rhodium 10

            I knew that you are stupid!

          • occupybacon

            Better stupid than living in that shithole

  • Tudor Miron

    Ruzionic elites – head of Russian central bank, head of ministry of economy and their buddies will try their best for this to happen. Their problem is that along with global changes in the world, lots of things are changing in Russia. Their positions in governing apparatus are diminishing rapidly.

    • Harry Smith

      Man, are you some kind of retard? Several article before IMF chief declared that world entered in the long term recession and now you are saying that Russian CB and Ministry of Economy are the reason of recession in Russia. Unbelievable!

      • Tudor Miron

        I don’t give a hoot about declarations issued by chief of IMF (a tool used for financial “colonization” of the world. I know that head of CB of Russia (actually a subordinate of IMF which is subordinate to federal reserve) together with economical block in Russian government (reduced recently and relegated to lower status) are implementing economical policies that are extremely harmful for Russian economics. Current state (low debt, high reserves) is actually not because of their activities but rather despite their activities.
        If you want to personally insult me – are you living around Moscow? If that’s the case than I will gladly offer you a chance to do it in person. Let me know.

        • Harry Smith

          What is harmful? Can you please be more precise.

          • Tudor Miron

            I will reply when I have a bt of free time.

    • FlorianGeyer

      Yes, and the Neo- Liberal zionists in Russia have exposed themselves.
      They can now be bought to account and their personal and family finances scrutinised for any traitorous links.

  • Mats Öhlén

    It is sad that Southfront is so blindly loyal to the Putin regime that it must (somehow routinely) miscredit the opposition in Russia as “neoliberal”. I think it is evident that this is not the case. Parts of the opposition is linely neoliberal but to stamp all organisations that strive for Democracy, fule of law and human rights as neoliberal is an intentional formulation to underline loyalty to Putin.

    • Harry Smith

      Can you just please name at least 5 organizations that “strive” for democracy and do not “strive” for homosexuals rights? So we can easy call them conservative.

    • Lone Ranger

      Russia already has democracy and rule of law.
      Russia has only two kinds of opposition CIA/soros funded and hardcore commies.
      Thankfully Russian people cant be fooled anymore.
      Keep crying and raging ;)

      • Harry Smith

        Russian commies are funded by State Dept too.

        • JIMI JAMES

          They are assets rather than the retarded nwo/tyrant soros/neo liberal retards
          who only dream of easy fake stocks money and possible lgbtq transformation!
          Russia has their far share of pro imf gorbachev traitors,macroeconomics = lies!

          • Harry Smith

            The irony is liberals like Soros or all kind of senators and congressmen are assets too. The big guys who define the roadmap of World development are looking at all these politicians like at dogs which have to be feed, pet and punish at the certain time. As for us we are just sheep for them.

  • Lone Ranger

    A little temporary recession is nothing when the whole planet is in a recession.
    Its all all because the U.S. Empire went belly up.

  • JIMI JAMES

    Russia is 100% gold backed,macroeconomics are for western fake,phoney and false phaedo reserve!