Russia is one the world's largest oil producers, 70% of its export incomes relies on just oil and gas. Which explains why there was a recent 17% interest rate hike. Russia is losing $2 billion in revenues for every dollar the oil prices drop. The World Bank estimates that Russia's economy would shrink by 0.7% in the next year if the price of oil does not rise. However, Russia is not cutting production to shore up oil prices. "If we cut, the importer countries will increase their production and this will mean a loss of our niche market," said Energy Minister Alexander Novak. Falling oil prices, coupled with
western sanctions over Russia's support for separatists in eastern Ukraine have hit the country hard.
Because of the twin impact of falling oil prices and sanctions, he said the government had had to cut spending. "We had to abandon a number of programmes and make certain sacrifices."
Russia's interest rate rise may also bring its own problems, as high rates can choke economic growth by making it harder for businesses to borrow and spend.
http://www.bbc.com/news/business-29643612
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