Russia’s dependence on commodities has grown since the 2008 crisis, making it vulnerable in the face of the potential global downturn, a report issued by the Development Center of the Russian National Research University – Higher School of Economics (HSE) said.
The report “New Crisis, Government, Business”, unveiled on Friday, analyzes a number of criteria relating to the country’s capacity to face economic crisis, including the commodities-dependent part of the budget, budget spending, volume of the reserve funds, capital inflow, and international reserves level.
“The current volume of the Reserve Fund will not withstand even a year if the oil prices fell to $80 per barrel,” the report reads. “The fulfilment of all of the federal budget’s obligations is possible only if the oil prices rise by 8-9 percent annually.”
According to the report, Russia’s dependence on commodity prices has increased as the country’s 2008 federal budget was balanced with an oil price of $60 per barrel, while in 2012 budget balance requires and average oil price of $105 per barrel.
Over the last two weeks concern about a potential return of global economic chaos has mounted as Greece has teetered on the brink of default and withdrawal from the Eurozone, while the potential impact on the global financial system has been underlined with Moody’s rating agency also downgrading the long-term debt and deposit ratings of 16 Spanish and 26 Italian banks on concerns about austerity, economic growth, and sovereign debt levels.
Russian experts say further global economic chaos may cause Russia’s GDP to slump by 2 percent per annum, a devaluation of the ruble, and capital flight to rise to $100 billion per year.