Imminent Collapse of Russia's Economy

[Redheart]

The plummeting of oil prices and Western sanctions crippled Russia's economy and recently when the Ruble's value dropped further there's speculation that the Russian economy might collapse any time in the near future. And apparently even those who'd been cushioned from the effects of sharply rising inflation are now starting to be felt by everyone including the wealthiest.

Do you suppose once Russia's woes get worse the government will try to find ways to turn the attention of the people from the economy to other matters say like war with Ukraine so they can annex part of it? How would Western powers react to that? The plummeting of oil prices and Western sanctions crippled Russia's economy and recently when the Ruble's value dropped further there's speculation that the Russian economy might collapse any time in the near future. And apparently even those who'd been cushioned from the effects of sharply rising inflation are now starting to be felt by everyone including the wealthiest. Supermarket shelves are empty because Russia banned imports from sanctioning nations and Russians are starting to hate Putin for all that.

Do you suppose once Russia's woes get worse the government will try to find ways to turn the attention of the people from the economy to other matters say like war with Ukraine so they can annex part of it? How would Western powers react to that?

 

[003]

The economy of Russia hasn't been better since the collapse of the USSR. And I think the solution to it is that they open themselves to the world and reap its benefits. Good economy makes a good country. Good economy could only be brought by good governance. Russia might already have a good governance, but is that enough to have a good economy? Good economy also spring from opportunities. So Russia as a close country has less opportunities. Opportunities are what they need in addition of their good governance.

 

[FilmFan]

I can't say that Russia's economy is going to "collapse" because of sanctions and other geopolitical events (the tinkering of oil prices, primarily). The overall economic climate of the world is still pretty poor and has yet to fully recover as a whole for many reasons beyond the scope of this thread. Many countries are feeling the effects of low oil prices, though.

In regards to the sanctions, they have had an impact, sure, but with the total disregard for the economics of many other countries that are reliant on Russia or rely on them as an export partner. The agricultural shut-down Russia utilized has harmed many countries in the EU (Greece and Italy for sure, but many others) and opened up positions for many other countries to take their place (Brazil, Vietnam, Venezuela, etc.), which will have a longer toll. Russia is also further solidifying positions with other countries, be it BRICS or the EEU, as a means to hedge against such instability with their Western partners. While they still want trading relationships with the West, they've put too many eggs with that orientation, and their shift East is certainly causing growing pains.

I agree with 003 about the "openness" of their economy, but they are quite hesitant. Between the South Stream gas pipeline fiasco and the Mistral warship situation with France, it's not exactly like the West wants much to do with Russia. But, these are political games certain countries are playing, and again a reason why Russia is opening more East.

I also saw this article a while back that mentioned how Russia has continued to climb the World Bank's ratings that regard a country's favorability to do business with them:

TASS: Economy - Russia should be among top 20 countries for doing business — PM

Finally, as far as "annexing" part of Ukraine as a foil, I simply can't see a reason to this or how it would ever help them and their current economic climate. Starting a true war would be insanity; Russia is currently playing defense, not offense, in a lot of ways.

 

[crimsonghost747]

Russia has been hit hard and this will just continue. The western sanctions are especially effective now that the price of oil has gone down... remember that a lot of Russian companies (mainly the energy sector) cannot get money from the west anymore. Big trouble ahead when their debts reach maturity.

On a less economical and more psychological level: a lot of western companies are suspending sales in Russia due to the weak ruble. The sales will probably continue as soon as the currency stabilises a little, but you can be sure that the price (in rubles) will be far above that which it was before.

 

[zenfive]

As mentioned above, I don't think that the Russian economy is likely to collapse as a whole, it's too big to let that happen. However it is evident that it has taken a big hit with the sanctions placed on them, and I really wonder what Putin's end game really is. However, many other countries rely on Russian resources and supplies, and that is probably their biggest saving grace.

I can't imagine the atmosphere inside the country is very optimistic either though, the people can see how the Ruble has been plummeting, and I'm sure its visible with so many companies realizing the unsustainability of doing business in Russia at the moment.

 

[fliktor7]

I don't know too much about the russian situation, but if their economy really collapses it could be a problem for sure, in this globalized world we have.
We (the world in set) should found a way for not leting this changes of the economy to affect the countries, move towards new business models, even with someone as unstable as Putin xS

 

[globulon]

While Russia is certainly in a pinch at present, I doubt anything as serious as a collapse would occur. Despite the international sanctions, I do not think that anyone wants to see a catastrophic collapse of the Russian economy. There would be a serious ripple effect that would send world economies into turmoil if that occurred.

 

[petesede]

I doubt they will collapse, but Russia gets 50% of their revenues from oil, and they did their budgets based on the price of oil being $100 per barrel. That is going to create huge budget deficits. The USA was pretty intelligent on their way to get rid of Putin. The billionaire friends of his are going to be putting a lot of pressure on him because they have all their assets frozen around the world and are losing a ton of money because of this. And the deficit and broader sanctions are going to erode the general opinion of him. At some point the russian people are going to blame him for their suffering and think that make Crimea was not worth all this.

 

[xTinx]

On the contrary, Russia did experience gradual progress following the dissolution of the USSR. A class of wealthy individuals called the nouveau riche emerged. Its economy was relatively well off after some time. I don't know what exactly caused their recent downfall but intuition tells me that there was mismanagement on the part of Putin and his cabinet. They were hurriedly trying to make up for the loss by using Crimea as an excuse.

 

[tournique]

I'm pretty sure their economy will stabilize in 5-10 years. And the sanctions will most likely wear off by then.

 

[petesede]

On the contrary, Russia did experience gradual progress following the dissolution of the USSR. A class of wealthy individuals called the nouveau riche emerged. Its economy was relatively well off after some time. I don't know what exactly caused their recent downfall but intuition tells me that there was mismanagement on the part of Putin and his cabinet. They were hurriedly trying to make up for the loss by using Crimea as an excuse.

That was a short-term burst phenomenon caused by a huge amount of new trade partners that became available in a very short amount of time. That point in time is kinda the mirror-opposite of what is happening right now. All of that trade that suddenly became available in the late 1980´s is exactly what Russia is losing now, and basically at the same, but opposite rate.