December 19, 2008
Russian manufacturing down more than 10%
Output form Russia’s factories has declined sharply, most likely showing a reaction to lax demand for products. Most of Russia’s press has kept an eerie silence about any economic difficulties, but all indicators are showing recession is in full swing.
Russian industrial production, a strong indicator of economic health, fell 8.7 percent in November, the Kommersant newspaper reports, citing a new report from the Ministry of Economic Development. According to the findings, manufacturing output dropped 10.3 percent; energy, gas and water production and distribution fell 9.3 percent; mining operations, excluding a seasonal effect, fell .6 percent. (The Other Russia)
December 5, 2008
Predicted $25 oil could be very bad news for Russia
Russia’s recent economic growth has been almost entirely due to its ability to deliver record oil and gas production at record prices. With prices in free fall, Russia’s economy will be stressed much more more than much of the world. With much of its revenues coming from oil, the government’s ability to intervene will be limited, and it’s ambitious spending plans will be scaled back. Hopefully, greater economic diversification will come as a result, but sadly it won’t come without some pain for the average Russian.
“In the short-run, market participants will focus on both OPEC and perhaps even non-OPEC producer responses to balance the market.”
“A temporary drop below $25 is possible if the global recession extends to China and significant non-OPEC production cuts are required,” it said.
“In our view, oil prices could find a trough at the end of Q1 2009 or early Q2 2009 with the seasonal slowdown in demand. Then, as economic activity starts to strengthen, we see oil prices posting a modest recovery in the second half of 2009.”
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