Russia
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The document provides an overview of the history of Russia's economy and the impact of the 2008 recession. It discusses how World War II impacted the Soviet socialist economy and the period of growth from 1945-1960. The Cold War era saw the economy become unstable and lagging developments. After the Soviet Union dissolved in 1991, Russia implemented economic reforms and saw growth until the 2008 recession caused by the global financial crisis and Russia's dependence on energy exports. The recession led to declines in industries like steel and automotive and issues like rising unemployment and inflation. While the shock was from external factors, the large impact within Russia was also due to internal weaknesses in its economy.
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Russia
- 1. Russian Federation A Historical Perspective of the Russian Economy, Currency and effect of 2008 Recession
- 2. Table of Content 1. Impact of Wars 2. Post 1991 3. Recession and Currency crises - overview 4. Causes of Recession, Currency and Stock Market 5. GDP and Effects of Recession 6. T-Test of GDP and Currency 7. Is Russian Recession Self-Made? 8. Conclusion
- 3. World War II •Socialist economy – prices fixed by state •USSR victorious. GDP fell only by 14% (over pre-war year) Stalin regime •GDP growth 9.11% avg (1945-1950) •Economy - Industry and military focused •Communism , centrally planned economy •1951-1960 avg growth of 5.81% •USSR wanted to be the energy superpower •High Military spending - At the cost of consumer goods •Confronted with the hostility of the other foreign powers Wars and their Economic Impact Source: From Papers by Stanley Fischer, Khanin, Alexey Shumkov Josef Stalin 1924-1953
- 4. Georgy Malenkov 1953 Nikita Khrushchev 1955- 1964 Leonid Brezhnev 1964-1982 Yuri Andropov 1982-1984 Konstantin Chernenko 1984-1985 Cold War •More imp to consumer goods aft death of Stalin •Economy unstable , market needs oblivious •Soviet converts east EU nations to communism •Khrushchev wanted to ease economy and smooth relations with west •Developments lagged, grains imported •U-2 shot down, Cuban nuclear plant besieged by US •declining life expectancy and the rising infant mortality , alcoholism •Kosygin reform – marketization - 1965 •the system failed after reaching its peak of growth in the 1970s – Era of Stagnation
- 5. Dismantlement of Soviet Union •The average per Capita GDP growth was -1,3 % •Gorbachev’s Perestroika (restructuring) was an economic reform policy involving the decentralization of the economy - Failed • Gave people room for thought and protest • Civil unrest spread across the eastern soviet countries caused them to rebel against the soviet regime •Russia lost much of 1/3 of working population Fall of communism ‘89-’92Fall of communism ‘89-’92 Mikhail Gorbachev 1985- 1991
- 6. Russia •Many economic reforms were made post 1991 •Liberalization, global integration, flexibility •Imports commodity •Reviving global ties •In 2011 – Top exporter of Oil •Exports natural gases, metals like steel and Al •Avg 7% growth rate post 1998 financial crisis until 2008 recession due to banking crisis Boris Yeltskin 1991-1999 Vladimir Putin 1999- 2008 Dmitry Medvedev 2008- 2012 Vladimir Putin 2012- present Post 1991
- 7. Economic Statistics Source: An analysis of the Soviet economic growth from the 1950’s to the collapse of USSR*. (Numa Mazat Numa Mazat** Period Average per Capita GDP growth (%) High economic growth (1950-1973) 3,6 Stagnation (1974-1984) 0,93 Perestroika (1985-1991) - 1,3 1950-78 1978-90 GDP 4,4 1,2 Population 1,3 0,9 GDP/capita 3,0 0,4 Labor force 1,6 0,3 Labor productivity 2,7 1,0
- 8. Recession and Currency Crisis • What is a currency crisis? • What are the conditions under which an economy becomes vulnerable to crisis? • What are the four major factors influence the onset and success of a speculative attack?
- 9. Three pillars to effective crisis control 1. Automatic crisis control 2. Adjusters 3. Starters
- 10. Government’s role • Need for impactful measures addressed in April 2013 • Timely government measures • Optimisation of corporate activity • The restraint demonstrated by the Russian people • Business stability in Russia was preserved
- 11. CAUSES OF 2008-2009 RECESSION • The financial disaster in the U.S. and it followed the chain reaction throughout the world. • Political fears after the war with Georgia • Economic dependence on energy prices (oil and gas) • Russian involvement in the US subprime mortgage crisis • The world crisis of liquidity, reducing the access of Russian companies to cheap foreign credit. • Export-oriented commodities faced with a situation where demand and prices fell.
- 12. RUSSIAN CURRENCY
- 14. CURRENCY AND GDP DATA
- 15. T TEST FOR CURRENCY
- 16. T TEST FOR GDP
- 18. Russian recession-effects • Steel industry-pig iron and ferric alloys felly by 21.7% in oct after 8.9% dip in sep. • Automative industry-8% increase in tariff for imported cars • Construction and real estate-freezing of projects • Airlines-Grounded by refusal of fuel supliers to give on credit • Agriculture,food industry and retail-Retailers getting govt. backed financing.
- 19. Social impact • Unemployment lay off of 8% managerial and 6% low level jobs by end of oct. • Consumer price inflation End of Nov 2008 reached 15.3%
- 20. Is Russian Recession Self made?? • Power Retention From Oligarch • Addiction to Natural resources
- 21. Contd…. • Conflict between Russia and Georgia • A game of See Saw played amidst Arkady Dvorokovich
- 22. Contd.. • Extending help to Iceland Euro 4 Billion. • Overheating of oil and gas industries. • Involvement of Russia in usa subprime mortgage crisis. • Taken Over of Fannie Mae and Freddie Mac by Usa . • Usa involvement in georgian war. • Confidence crisis over liquidity problems
- 23. Contd….
- 24. Graph Presentation • A – Vladimir Putin criticises Mechel. B – 2008 South Ossetia war starts. C – Recognition of Abkhazia and South Ossetia by Russia. D – Alexei Kudrin "no systematic crisis" speech. E – measures to save major banks are adopted by the Russian government. F – Global financial crisis of September–October 2008. G – President Dmitri Medvedev announced additional bailout financing
- 25. The Shock was External, but the impactness was highly internal.
- 26. Spacibo! (thank you, in Russian)
Editor's Notes
- A currency crisis is sudden devaluation of currency as a result of a speculative attack on a country’s currency, or balance of payment deficits. A speculative attack means a precipitous acquisition of some assets by previously inactive speculators. A country that uses fixed exchange rate is more suseptible to speculative attack than a country with floating exchange rate. It also depends on the amount of reserves of that currency with the country, it acts like a cushion. four major factors influence the onset and success of a speculative attack. These key ingredients are (i) an exchange rate peg and a central bank willing or obligated to defend it with a reserve of foreign currency, (ii) rising fiscal deficits that the government cannot control and therefore is likely to monetize (print money to cover the deficit), (iii) central bank control of the interest rate in a fragile credit market, and (iv) expectations of devaluation and/or rising inflation.
- President Putin has challenged government officials to come up with new measures to protect Russia from global economic troubles. The development of Russia's legislation on intellectual property A programme of anti-corruption measures has been adopted and is being implemented in Russia.