Russian Economy Overcomes Long Drawn Out Crisis

Economy

Russian Economy Overcomes Long Drawn Out Crisis

The year 2017 brings good news for the Russian economy that looks all set for a steady growth trajectory overcoming the long crisis stemming from widespread international sanctions. According to statistics available from Gosstat, the official statistics body of Russia, all the branches of Russian industry have registered confident recovery growth.

During the last 11 months of the outgoing year compared to the same period in 2015, the food industry has registered 2.5% growth while textile industry has grown at a rate of 5%, leather and shoe industry by 6.3%, wood industry by 3.2%, chemical industry 4.5%, rubber and plastic production 5.9%.

The most important news definitely is that the machine-building branch - the backbone of Russian industry that was worst hit by the crisis - has displayed significant growth. The production index of the machine-building industry in the 11 months of 2016 is 103.6% compared to the same period in 2015. Further indication of recovery growth was rise in consumption and investment by large and middle-scale enterprises. As a whole the growth in investment in the entire economy registered 0.9% growth whereas this indicator constituted 1.9%.

The double trouble for the Russian economy were international sanctions in the aftermath of the Crimean re-incorporation into Russia as well as the steep decline in oil prices, the main source of income for the Russian budget. While the sanctions turned out to be a blessing in disguise by stimulating import substitution, the recent upward trend in oil prices in the range of US $ 50 to 60 has contributed to economic recovery in no small way.

According to Moody's forecast, the Russian economy is expected to grow by 1.5 to 2% as a whole in 2017. The Russian Ministry of Economic Affairs is careful in its forecasting that economic growth would register 1 to 1.15% in 2017.