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All news / New Global Economic Crisis Threatens Russia, Analysts Say

  • 01 Aug 2019, 11:28

Russia’s Analytical Credit Rating Agency (ACRA) has joined analysts around the world predicting a new global economic downturn which could hit Russia severely, Nezavisimaya Gazeta writes.

The agency’s analysts are predicting that the new crisis will begin at the end of this year. According to them, the Chinese-American trade war will trigger a recession in the United States (-0.7% GDP) in 2020, while China will only face a slowdown in growth rates of 4-4.5%.

The decline in the global trade growth rate will lead to a drop in demand in Russia’s traditional export goods, namely raw materials, ACRA said.

Experts polled by Nezavisimaya Gazeta aren’t optimistic that Russia’s economy will be able to keep growing while the global economy subsides.

“In the event of a global economic slump, Russia’s economy will hardly stay afloat, especially given the current sanctions,” said Ivan Kapustyansky, a leading analyst at Forex Optimum.

“This is explained by its structure. Russia’s economy depends on export, and Russia’s key export is raw materials. Thus, should global demand slow down, the demand in raw materials will fall as well,” he added. According to the expert, only significant structural economic reforms can change this situation.

Gennady Nikolayev from the Academy of Finance and Investment Management notes that Russia has substantial financial reserves, but lacks ideas of how to invest them.

“The government has no idea as to how to boost the economy and hopes to carry out a milder monetary policy. So, should a global crisis start, Russia will be affected no less than other countries,” the analyst noted.