Russia's Collapse in 5 Stats
After a stunning currency collapse, Russia is now fully in the grips of an economic crisis. How deep is the chaos? Here are five stats that put Russia’s woes in context.
Ruble Riot
Russia’s currency entered free fall this week, hitting a record low of 80 rubles to the dollar today before recovering slightly. The ruble has lost over half its value this year, making it the worst-performing currency among the 170 tracked by Bloomberg. Passed on the way down: the Ukranian hryvnia.
Recession Looming
Russia's economy has been slowing for some time, and is now poised to fall into recession. In early December, Russia's economy ministry was forced to revise its estimate of 1.2 percent growth for 2015 down to a 0.8 percent contraction. Since then, oil—which makes up 50 percent of government revenue—has continued to slide, falling below $60 this week. Russia's central bank warns of a contraction of 4.7 percent in 2015 if oil prices stay at that level on average.
Surging Borrowing Costs
The economic chaos is making it significantly more expensive for Moscow to borrow money. Dollar-denominated bond yields rose above 7.5 percent, meaning the cost of international borrowing for Russia is now higher than Rwanda, the Ivory Coast and Kenya, according to the FT. Russia's 10-year local bond yield, the interest rate the government has to pay to borrow, jumped more than 2 percent to 15.36 percent.
Brain Drain
In addition to money, Russia is bleeding talent, as ordinary Russians vote with their feet. In the first eight months of this year, Bloomberg reports, more than 200,000 people left Russia—more than any full year since Vladimir Putin took control.
Capital Flight
Russia is watching money head for the exits too. Capital outflows for 2014 are estimated at $134 billion, according to the Financial Times. 2015 is likely to see a similar exodus, with the Central Bank yesterday forecasting $120 billion in departing capital.
What Does It Mean?
So far, economic chaos hasn't dented the popularity of Russian's president. Putin won “man of the year” this week for the 15th year running in a Russian poll. His aggressive foreign policy has only strengthened his domestic political standing. Russia's currency collapse is bad news for Russians, but for the rest of the world, the problem is more geopolitical than economic.
Photo credit: World Economic Forum / Flickr
Ian Bremmer is president of Eurasia Group and global research professor at New York University. You can follow him on Twitter, Facebook and LinkedIn.
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9yTENTE????????????
Economista | Analista de Datos | Inteligencia de Mercado y Negocios
9yThis situation is explained in stages: 1) The credibility crisis of USA at wikilieaks scandal and NSA, 2) Rusia take advantage of this situation to protect Syria and advance in Ukraine 3) China take advantage too, approaching to Rusia (gas megaprojects) and thoughen conditions to USA firms in China, 4) How to disentangle this mess? Well, simple, knock down the oil prices ally with the Arabs. Russia is the largest oil producer. And obviosly, the main-media try to insert the premise that the arab oilers want to impact the USA "frackers" profits.
BusinessEconomist/NikkeiColumnist/IndonomicsConsulting/Raymond/ABG/ISAMPA/IVLP/EIU/Moneycontrol/Sugaronline/VisitingFaculty IMT
9yExcellent Analysis by Ian Bremmer as usual...
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9yRicardo, I going to say an interesting thing, and perhaps someday I will have to answer before those who customizes Europe and America against Russia. It's just my thoughts. Think about why the Netherlands has received the gold from the US government. Was denied even for Germany. How Come? For concealing the true facts about the nature of damage BOEING, shot down over Ukraine? Why The Dutch government has allowed only one family to see the wreckage? Why they were not allowed to take pictures? This gold - payment for silence? Somebody do not want to tear the web of lies, in which so cleverly trying to wrap Russia? I will say even more. Why a world government is trying to make Russia an enemy? To create a new military conflict, more than all previous conflicts? To create a new market for the sale of their weapons?
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9yTo Ricardo Cuevas. Excuse me, Ricardo, but your opinion is difficult to accept. We have enough free press, better look in internet, and you can find a lot of very different opinions about president of Russia, about russian government and political situation in country and in the world, especially in recent years. Unfortunately, the press freedom situation is getting worse in Western Europe and America. In the Internet you will find the recognition of one of the German of paid journalists who are no longer able to remain silent. He admitted that in recent years received a lot of money from american government for denigration of Russia in their publications.