The impact on the Russian economy of the falling oil prices is likely to be serious and lasting. In 2008, when the oil price fell to $32 per barrel, the Russian stock market fell by 80 percent in dollar terms in the course of half a year. The Russian stock market never recovered.
This time a RTS fall of 50 percent would be natural. In 2008, Russia’s GDP slumped by 8 percent, and a decline of several percent seems likely this year.
Russia’s GDP stood at $1.65 trillion before this calamity. As the ruble usually falls with the oil price, Russia’s dollar GDP is likely to plunge to some $1 trillion, which will reduce Russia’s international leverage.
How much suffering Russia’s poor people are prepared to take?
The Kremlin has seriously overplayed its hand both in the Middle East and on the oil market.
The Kremlin has seriously overplayed its hand both in the Middle East and on the oil market.
