After a weaker than expected first quarter, today the Russian Federal State Statistics Service is expected to announce a second
After a weaker than expected first quarter, today the Russian Federal State Statistics Service is expected to announce a second quarter GDP contraction of around 10%, a figure unseen since the Russian recession of 2008-2009.
With a likely budget shortfall of over $50 billion, the country is expected to face a 5% deficit in 2020, down from a surplus of 1.8% in 2019. Due to falls in domestic demand, oil prices and exports due to the COVID-19 pandemic, the economy is currently being shored up by the financial, automobile manufacturing and agricultural sectors.
Nevertheless, expect Russia’s economy to quickly stabilise as the pandemic persists. Moscow has spent the last decade encouraging domestic financial stability to counteract sanctions and external shocks, leading to very low debt levels, low inflation risks, stable foreign exchange and a large foreign reserve balance sheet. Moscow is looking to boost investor confidence and jumpstart the economy in 2021 by beating the US, China and Europe to a COVID-19 vaccine. However, if this effort fails then it is unlikely that Russia will be able to maintain its current deficit and will quickly lose the comparatively strong position it has built over the past decade.
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