RUSSIA: COPING WITH TERMINAL DECLINE
Transcript of RUSSIA: COPING WITH TERMINAL DECLINE
Russia: Coping with terminal decline?
MOHAN GURUSWAMYFORUM FOR STRATEGIC INITIATIVES
NEW DELHIJANUARY 6, 2015
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Source: http://www2.goldmansachs.com/insight/research/reports/99.pdf
The 2050 silhouette!
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Declining fertility rates and increasing mortality rates, especially among working-age males, have steadily reduced the size of Russia’s population from 148.7 million people in 1992 to just 144.9 million in 2000.
According to US Census projections, Russia is expected to further contract in the next five decades to 118 million people, the level it achieved in 1960.
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Russia is one of the world's largest oil producers, and its dramatic interest rate hike to 17% in support of its troubled rouble underscores how heavily its economy depends on energy revenues, with oil and gas accounting for 70% of export incomes or about $365 billion.
Russia loses about $2bn in revenues for every dollar fall in the oil price, and the World Bank has warned that Russia's economy would shrink by at least 0.7% in 2015 if oil prices do not recover.
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Oil prices have fallen below $60 a barrel, a huge problem for Russia, where oil and gas revenues finance more than half of the state budget of about $338 billion.
Russian authorities were banking on oil prices of $100 per barrel in 2015 to balance the books and are forecasting a sharp recession if prices remain at current levels.
Russia’s central bank has taken the drastic step of raising its main interest rate to 17%, a rise of 6.5 percentage points. It is a desperate attempt to restore confidence in the rouble, which has almost halved in value against the dollar in six months..
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