Russian officials on Tuesday warned the country faces a recession in 2015 that could see the economy shrink for the first time in five years. They believe it will contract by 0.8 percent next year, down from a previous estimate of 1.2 percent growth. Ordinary Russians have watched as their currency lost nearly 40 percent of its value since the beginning of the year. They can also expect double-digit inflation by early next year, officials predict. Even those with ties to Putin are warning about the dangers of his current political strategy, which has spooked investors and boosted capital flight to nearly $130 billion this year. Late last month, a well-respected former longtime finance minister under Putin argued in a newspaper editorial that the presidents populist approach would slow economic growth in the long term. To be sure, most Russians havent registered the developments quite yet. A majority of the population still credits Putin for restoring what it sees as Russias rightful role on the global stage. ... 60 percent of Russians say theyve noticed the hike in consumer prices, a whopping 82 percent of decided voters would reelect Putin in a snap presidential heat, according to fresh Levada statistics. Some observers suggest Russias economy can still float along while depending on its substantial foreign currency reserves — which hover around $400 billion — to stave off economic depression and widespread discontent. But Aslund says the usable sum of those reserves is actually much smaller, while the price of oil may continue its steady slump. On one hand, Putin has already successfully weathered a mass protest movement and defanged his political opposition. On the other, its the first time his 14-year rule has been put through such economic trials. Were only in the very beginning of this situation, Volkov adds, so its rather hard to forecast how it will develop. cnbc/id/102235487
Posted on: Sun, 07 Dec 2014 08:41:43 +0000
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