2023-06-19 00:00:00
“Ruble depreciation” does not stop due to capital outflow
Recently, the Russian ruble has fallen once morest the US dollar. The rate of decline from the beginning of 2023 to June 12 has reached regarding 13%. The background to this is likely to be the increasing outflow (flight) of funds from Russia. In a sense, the Russian public may be starting to give up on Russia as well.
Photo = SPUTNIK / Jiji Press Photo
Russian President Vladimir Putin = June 13, 2023
After the outbreak of the Ukraine conflict, the United States, Europe and others excluded some Russian banks from the international payment system. The number of foreign companies withdrawing from Russia also increased, and funds flowed out. Concerns regarding the deterioration of public finances also increased. Revenues fell due in part to lower prices for crude oil, a major export commodity. On the other hand, Russia’s war expenditures have increased, and the fiscal balance in 2022 has slipped into the red.
From May onwards, concerns regarding inflation in Russia began to rise due to factors such as the depreciation of the ruble. In May, the consumer price index (CPI) rose 2.5% year-on-year (2.3% the previous month). At present, the inflation rate is still low, but the central bank of Russia is increasing its vigilance once morest further inflation.
Recently, fears of a recession are growing worldwide. Demand for crude oil is declining, putting downward pressure on energy resource prices. Russia’s oil-related revenues will decline, and concerns over financial deterioration will increase. Supporting the economy from a financial standpoint is likely to be difficult.
Four consecutive quarters of negative growth
Depending on future developments, Russia may fall into a severe situation called “stagflation,” in which soaring prices and economic recession progress at the same time. If this becomes a reality, the economy will become more severe, and anti-war sentiment among the people will increase. A falling ruble and rising inflation may make it harder for Russia to sustain the conflict for long.
Now the Russian economy is in recession. We cannot be optimistic regarding the future. The real GDP growth rate for the January-March quarter of 2022 was +3.0% compared to the previous year. Since then, negative growth has continued. Real GDP growth in calendar year 2022 was minus 2.1%. The negative growth rate in 2022 exceeded the expectations of the Russian government and others. One of the factors was the slowdown in import growth.
GDP is calculated by adding together personal consumption, government spending, investment (such as capital investment), and net exports (exports less imports). In 2022, Russian imports decreased from the previous year. On the other hand, purchases of Russian crude oil by countries such as China and India helped to stem the decline in exports. As a result, the economic growth rate did not decline as much as expected.
In the January-March quarter of 2023, Russia’s real GDP declined by 1.9% (preliminary figures). The Russian economy has fallen into negative growth for four consecutive quarters, and the recession is serious. A major factor is the decline in personal consumption.
1687155083
#Russian #people #abandoning #Russia #inevitable #Putin #administration #rubles #depreciation #stopped #Russian #economy #negative #consecutive #quarters #PRESIDENT #Online #President #Online
