MORGAN STANLEY: Things are only going to get worse for Russia's battered economy
Carsten Koall/Getty Images
The world's largest country (geographically speaking) has been mired in a financial crisis since oil prices started to crash in mid-2014, and according to Morgan Stanley economist Alina Slyusarchuk that crisis has some way to run yet.
In the bank's latest chartbook on the country's economic situation, Slyusarchuk predicts that Russia will stay deep in recession this year, the federal deficit will widen, and the current account surplus will continue to decrease.
When Russia first entered its current financial crisis in 2014, many analysts predicted that the crisis would follow a similar pattern to the one witnessed in 2009, when the country's economy recovered strongly in a V-shaped rebound (when you mapped it on a chart, the size of the economy drew a V shape). But that recovery hasn't materialised, and a prediction MS made in January 2015 has now come true.
"Looking ahead, barring a strong rebound in oil prices or the lifting of sanctions, we see the recession lasting much longer through 2016, unlike the V-Shaped rebound in 2009, particularly given the rising risk of further sanctions," Slyusarchuk wrote in a note soon after Russia's financial crisis started.
Here's the chart ;from this month's note showing that the V-shaped recovery hasn't been forthcoming:
Morgan Stanley
Here's the key extract from Slyusarchuk (emphasis ours):
Given the renewed and now protracted oil weakness, we expect further moderate deterioration in the VSI indicator. We expect growth to stay in negative territory at -2.1%Y in 2016, the federal deficit to widen to 4.2% of GDP and the current account surplus to narrow from 5.6% of GDP in 2015 to 3.8% in 2016.
And here's the chart to show how VSI has changed in the last few years:
Morgan Stanley
For instance, when oil producing nations failed to agree a deal to freeze production in April at their much-anticipated meeting in Qatar, Russia's markets took a beating. The day after the meeting, both the ruble and the country's stock market crashed as a result of a slump in oil prices.
However, as the oil markets start to rebalance things could get marginally better for Russia as the oil price should improve.
- 6 reasons why you should visit Ladakh this summer
- TVS iQube gets a new variant priced under ₹1 lakh, ST variant gets a bigger battery
- As English players begin their premature IPL exodus, Gavaskar calls for action against England Cricket Board
- Top 10 destinations for river rafting in India in 2024
- Should you enrol your child in an online university like IGNOU?
- Nothing Phone (2a) blue edition launched
- JNK India IPO allotment date
- JioCinema New Plans
- Realme Narzo 70 Launched
- Apple Let Loose event
- Elon Musk Apology
- RIL cash flows
- Charlie Munger
- Feedbank IPO allotment
- Tata IPO allotment
- Most generous retirement plans
- Broadcom lays off
- Cibil Score vs Cibil Report
- Birla and Bajaj in top Richest
- Nestle Sept 2023 report
- India Equity Market