Wednesday, December 3, 2014
Russia Warns of Recession in 2015
http://www.bbc.com/news/business-30288739 DUE 8 DECEMBER 2014 (one of two). What are the reasons for Russia's decline into recession? How does oil factor into Russia's problems? Make certain you write the second blog.
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Russia’s economic development ministry estimates that the economy will contract by 0.8% next year. But it has been previously concluded the economy will grow by 1.2%. Russia relies heavily on tax revenues from the oil industry and it makes it sensitive to price movements. Household incomes are expected to decline as well by 2.8% though it was thought that it grow previously by 0.4%. They had their biggest one-day fall since 1998 of almost 9%.
ReplyDeleteIf the average price of oil were $80 per barrel in 2015, the fall in GDP was in line with the economy ministry’s prediction of a 0.8% contraction. If it was $60 a barrel in 2015, the Russian economy would be in a “stress scenario”. The GDP would decline by 3.5% to 4%. The price of oil has fallen almost 40% since the summer because of oversupply. Demand has also fallen especially in Russia. Many members of the oil cartel need prices to be above $100 a barrel.
Russia's decline into recession is a result of the estimation that will contract 0.8% in the following year. Russia's reliance on tax revenues from the oil industry has made it too affected by price changes and movements. Another factor is that household incomes are expected to decline by 2.8% instead of the previous growth by 0.4%, but it was not remotely close to the single-day fall in 1998 which fell by 9%.
ReplyDeleteGDP, or gross domestic product, was also in the prediction to drop by 0.8% if the average price for oil was around $80/barrel in 2015. If it were $60/barrel, the Russian economy would go through what is known as the "stress scenario". GDP will decline at 3.5-4%. Due to an oversupply of oil, price has dropped nearly 40% and demand has especially fallen due to the prices wanting to be $100 or more/barrel.
The reason for Russia’s decline into recession is a part of its estimate that the economy will contract by 0.8% next year. Before it had overestimated that the economy would actually grow by 1.2%. Also it was estimated that income would drop by 2.8% when before they had estimated it would again, grow by 0.4%. On Monday the rouble experienced a big drop in value, and in this year alone it has already dropped by 40% in value.
ReplyDeleteAlso Russia relies on tax revenues from its oil industry. Oil prices and demand has fallen because the US is oversupplying oil and Opec has not yet decided to cut production to stabilize prices.
Due to the value of Russia’s currency’s falling and the falling price and demand of its oil Investors are unwilling to invest in the country.
Russia is one of the countries that heavily depends on the price of petroleum as one of its economic markers. The fact that the price of oil has recently dropped has changed a forecast that expected the economy to increase 1.2% to almost do a three-sixty turn around and now it is expected for the economy to decline by .8% in 2015. Not only is Russia affected, many other countries that rely on oil prices will find themselves affected. This is one of the dangers of forming cartels in an oligopolistic market. The product they make and the cartel's importance is only effective in being a price maker for as long as the product is a necessity, the second that demand decreases because of new technologies or other factors, cartel countries will find themselves struggling to make a growth. It also applies to companies. If oil prices fell, or if oil dependance disappeared entirely, then these oil producing companies would suffer a major impact. Needless to say, this is a major incentive for corruption, as companies or firms or even countries might be more willing to take the chance in doing something illegal like bribery or blackmail so that they don't suffer stagnation or losses. I think this is a good thing, i believe we should break up these oil cartels and get away from a oligopolistic oil market and get into more competitive markets like solar energy, a field that can be considered a monopolistic competition as many firms enter the market daily with a different product. This might not only boos our economy as a country and diminish other countries' economic power, but it might also cause americans to reignite their passion for ingenuity and cause a major movement of the sciences and of thought. However, first we need to continue to take steps in reducing the dependence on oils and those cartel countries and return to being a country that prides itself in being the best of the best, the biggest of the biggest, and the proudest of the proud.
ReplyDeleteRussia’s economic development ministry estimates that the economy will decrease by about 0.8% in the upcoming year.However, they used to believe that the economy will grow by 1.2%. Russia relies heavily on the tax revenues from its oil industry and thus it makes their economy sensitive to price movements within the oil industry. Russia also makes money from household income tax. Household incomes are expected to decline as well by 2.8% even though they thought that it would grow by 0.4%.
ReplyDeleteIf the price of oil were $80 / barrel in 2015, the fall in GDP would be the same as their prediction of a decrease of 0.8%. If the price of oil was $60 / barrel in 2015, then the Russian economy would be in a “stress scenario”. The GDP would also decline by about 3.5% The price of oil had fallen almost 40% since the summer because a surplus of oil.
The main reason is see for Russia decline is that they over estimated its growth of GDP , and now they etiolates that instead of a 1.2% growth they will actually decline by .8%. There currency has lost 40% in value in just this year. "The real damage from the collapsing rouble and oil price is to investment and growth,'' said Chris Weafer. The price of oil has fallen about 40% because of oversupply caused by US shale oil production. most governments need a price of over 80$ a barrel to balance their government budgets.. Russia seems to be one of them.
ReplyDeleteRussia's GDP is expected to drop by 0.8% in 2015, originally the Russian Economic Development ministry believed it would actually grow by 1.2%. The rouble, Russia's form of currency, has already lost 40% of its value in just this year. Oil prices have also fallen, a major part of Russia's income. Since the summer, crude oil prices have gone down by 40% because of increased oil shale production in the U.S. The decline in the rubble and oil prices together are sending Russia into a recession.
ReplyDeleteOil is a major factor in Russia's problem. If oil were $80 per barrel in 2015, the GDP would fall by 0.8% like the economic development ministry predicted. If the situation became worse and oil was at $60 per barrel, GDP would decline by 3.5% which would certainly be disastrous. Russia's reliance on tax revenues it makes from oil makes it particularly vulnerable to fluctuating oil prices. Overall, oil is the biggest cause of Russia's economic issues.
Russia’s decline into recession is said to be because of the economy to contract by 0.8% next year; however, it was previously estimated that the economy would grow by 1.2% in 2015. Another reason for Russia’s decline into recession would include how the country’s reliance on tax revenues makes them vulnerable to price movements. Lastly, Russia’s household disposable incomes are also said to decline by about 2.8%, as compared to previous estimates that the country would grow by 0.4%. Oil plays a large role in Russia’s decline. If oil were $80 per barrel in 2015, the GDP would fall by 0.8% as previously predicted by the economic development ministry. If oil were $60 per barrel than the GDP would decline by 3.5%, leading Russia into a “stress scenario”.
ReplyDeleteThe main reasons for Russia's decline into recession are its economic development ministry overestimating its GDP for 2015 and its over-reliance on tax revenue from oil industries. While it was previously estimated that the economy would grow by 1.2% in 2015, that estimate has now changed to the economy contracting by 0.8%. Household disposable incomes are also expected to decline by up to 2.8% despite previous forecasts of growth. Due to Russia's severe reliance on tax revenues form oil, the economy is left to the whim of fluctuating oil prices. At a price of $80/barrel of oil, the ministry's prediction will be correct. At a price of $60/barrel, the ministry believes that the bank will experience a "stress scenario". Another contributing factor to this is the oversupply of oil in the market and China cutting down on oil use in industrial production.
ReplyDeleteRussia’s economic development ministry estimates that the economy will contract by 0.8% next year. The reasons for Russia’s decline for recession are Russia's reliance on tax revenues from the oil industry makes it particularly sensitive to price movements. Russia also relies on money from household income tax. Household incomes are expected to decline as well by 2.8% even though they thought that it would grow by 0.4%.
ReplyDeleteOil factors in russia’s problem due to their economy being heavily dependent on the importing and market of oil. If oil were $80 per barrel in 2015, the GDP would fall by 0.8% like the economic development ministry predicted. If the situation became worse and oil was at $60 per barrel, GDP would decline by 3.5% which would certainly be a “stress scenario”. The economy is dependent on the fluctuating oil prices.
Due to a disagreement with OPEC over oil production, oil prices are extrapolated to reach a new low next year that will cause Russia’s economy to contract by .2% rather than increase by 1.2% as previously estimated.
ReplyDeleteThe problem with Russia’s decline is that its budget and investing power stems from tax revenues on the oil industry. The U.S. has produced so much oil that it has caused an overproduction that, when shifting the production curve to the right, has led to a lower equilibrium value. This is unfavorable to a larger market because they have to suffer with lower prices (possibly $80 or, pessimistically, $60, compared to a need $100). Russia’s currency has already lost 40% of its value (the rouble); this added problem can only hurt the GDP of the country. With this problem, investment cannot flourish – which hurts businesses, then hurts the government, then hurts the people.
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ReplyDeleteThe two main reasons for Russia's decline into a recession are, economic repercussions as a result of Western sanctions, and falling oil prices. Russia's economy is very closely linked to the production and sale of oil. Due to their geographic location there are not many products that the people can produce in order to sell. In addition, the cold weather as well as the hostile government prevent any tax revenue from tourism. Therefore, they rely on selling oil.Russia's economy reacted negatively to falling oil prices because most of the country's tax revenues, as well as industry growth is tied to the sale of oil. If producers can't sell oil at a price above their cost of producing the oil, they will not make any profits. Since they can't make any profits, they will be unable to pay taxes. In addition, if they can't make profits, they can't grow and thus unemployment rates will rise.
ReplyDeleteThis is being reflected in the economic forecasts.New estimates now forecast next years GDP to contract by 0.8% and household disposable incomes are expected to drop as well. If the price of oil drops further, the economic troubles for Russia will only expand. The article writes that if the price of oil drops to $60 a barrel, the Russian GDP will contract by 3.5%-4%.
The reason for Russia’s decline into recession is the fact that their estimated GDP for 2015 fell from a growth of 1.2% to a loss of 0.8%. Household disposable incomes are also estimated to fall by as much as 2.8% by the start of next year. On Monday, the rouble suffered its biggest loss since 1998 and this is indicative of the changing oil prices. Part of Russia’s problem is their large dependence on oil prices and their economy has been hurt with the recent falling oil prices. With the price of a barrel of oil at $80 it is predicted that the economy will experience a contraction of 0.8% and with the price of a barrel of oil at $60 the GDP of Russian would decline by 3.5% to 4%.
ReplyDeleteOil is a predominant factor in Russia’s problem because it is Russia’s largest natural resource and it is an economic asset for Russia as a whole. The fluctuating oil prices can indicate if Russia is doing well financially or if it is struggling. The price of oil has fallen almost %40 because of oversupply of the resource and demand for it has fallen in industrious countries like China. The leaders of OPEC met last week to discuss the falling oil prices and they have decided to not do anything about it. This will affect Russia in this upcoming year because low oil prices mean that Russia will not be making the money that it needs.
Russia has been on the verge of economic decline recently. One main reason happens to deal with their budgeting. With currency sliding and the frivolous spending, the banks have taken a toll. GDP is expected to decline from 3.5% to now 4%. The second reason happens to be oil. With the falling oil prices, an average of $80 a barrel would lead to a 0.8% contraction for 2015. For $60 a barrel, this would just cause a "stress scenario". The decreasing price is due to a decrease in demand and an increase US shale oil. The price is wanted at $100 per barrel, OPEC members haven't made an agreement.
ReplyDeleteRussia, once predicted to have an economic growth of 1.2% by 2015, has now been predicted to drop by 0.8%. The other reasons for Russia's decline into recession are western sanctions resulting from its role in Ukraine, and falling oil prices, which the country relies on heavily. In fact, oil is a major reason the country is falling into recession. “Russia's reliance on tax revenues from the oil industry makes it particularly sensitive to price movements.” Therefore, the dropping price of oil is negatively affecting the GDP. Right now Russia is basically a non-investible country, and will remain in this category until both the rouble and oil stabilize at minimum.
ReplyDeleteRussia believed that their economy would grow 1,2%, but new predictions say that they will actually contract .8%. Russia relies on the oil industry, so changes in price affects Russia Dramatically. recent drops in the price of oil has affected Russia, so their revenue is as high as usual. for individuals, household incomes are said to decrease by 2.8%. The price of oil was predicted to be 80$ per barrel, but recent oil prices have declined by 40% due to the surplus of oil.
ReplyDeleteIn 2015, unlike previously estimated at a growth of 1.2%, Russia’s economy will contract by .2%. This was caused by problems in OPEC over the production of oil, where industries decided to keep oil pumping at the same constancy. The U.S and other large importers have “flooded” the market by overproducing, which has caused other industries to lose as well as the depreciation of world revenue and revenue of OPEC.
ReplyDeleteThe problem for Russia? Its investing power will be severely limited, because most of its budget comes from tax revenues on oil. The loss in price for their imports will greatly reduce the budgetary means they have to implement programs and the power of businesses. Because of the influx from other countries into the world market, the surplus has led to a lowering of the price (as supply increases, the demand decreased because price lowers). The estimates say that, while prices are generally OK, they could go down to $60, a price startlingly low for countries that need $100 prices to keep their economies afloat.
Russia has already lost a good 40% of its currency value. This problem, mixed with contractions in GDP, will hurt greatly hurt the country.
The reason for the Soviet Union's decline is because of the value of their ruble decreasing. With this in mind Russia predicts GDP will fall from 3.5%-4%. Another reason why Russia is in a steady decline into recession is heavy reliance on oil tax revenue.
ReplyDeleteThe price of oil was predicted to be $80 per barrel, causing the economy to decline 0.8%. If price per barrel became $60 a barrel this would make matters worse, a "stress scenario" if you will.
The original prediction for Russia's economic growth was 1.2% but is now projected to decline by .8%. This decline is heavily dependent on the price of oil. Due to the United States getting more oil and China's decrease in oil demand, the price of oil has been dropping. OPEC met to consider raising the price of oil but left without making any significant changes, possibly to try to force competition out of business or just because a deal couldn't be reached. The price of oil is currently about $77 per barrel. At a price of $80 per barrel, Russia's economic growth would be about -.8%. To balance the budget, Russia would need oil prices to be over $100 per barrel. Some envision a scenario where oil prices could be as low as $60 per barrel, which would cause a 4% decrease in the Russian economy.
ReplyDeleteThe reasons for Russia’s decline into a recession include estimates that the economy will decrease 0.8% by the following year. However, Russia’s economy is also estimated to increase by 1.2% because they depend on the oil industry’s revenue which makes price movements prone to change. Also, there has been indications that household incomes will decrease by 2.8% even though predictions estimated a growth of 0.4%. Yet this decrease of 2.8% does not compare to the decrease of 9% in the year 1998.
ReplyDeleteOil is considered to be one of Russia’s economic issues since their revenue and price movements are prone to sensitive changes. Considering if the price of oil was $80 per barrel by 2015, Russia’s GDP will fall by around 0.8%. Then considering if the price of oil was $60 per barrel, Russia’s GDP would fall by 3.5% which means that Russia would take a massive hit in their oil industry’s revenue. Again, Russia’s dependence on the revenues of their oil industry’s makes price movements sensitive to change which is why oil is considered one of Russia’s main economic issues.
Russia’s economic development ministry estimates that the economy will decrease by about 0.8% in the upcoming year. Nevertheless, they used to believe that the economy will grow by 1.2%. The reliance on tax revenues makes them vulnerable to price movements. Household incomes are expected to decline as well by 2.8% though it was thought that it grow previously by 0.4%.Oil is a big factor in Russia's problem. If oil were $80 per barrel in 2015, the GDP would fall by 0.8%. This would be where the economic development ministry predicted it would be. If the situation became worse and oil was at $60 per barrel, GDP would decline by 3.5% which would obviously a bad thing. Most require a price above $80 a barrel to balance their government budgets and many need prices to be above $100 a barrel
ReplyDeleteRussia has recently slid into a recession, the economy is projected to contract by .8% in 2015, even though they initial projection was a growth of 1.2%. With the recession also comes a decrease in disposable household income by 2.8% and the decline in value of the Russian Rouble, which fell by 9% on monday (a total fall of 40% this year). This decline in Russia's economy is mostly because of oil. Since Russia has a heavy reliance on tax revenues from the oil industry, any drop in price can really hurt the economy. Oil prices are down almost 1 USD since this past summer because of oversupply due to US shale oil production. Coupled along with China's decreased demand for oil, Russia is really hurting.
ReplyDeleteThe two catalysts for Russia's economic downturn was the fact that estimates showed the economy would grow by 1.2% in 2015, but new estimates, Russia's economic development ministry estimates the economy will contract by 0.8% next year, suggest otherwise. When expectations are moved that much companies are forced to change their business models and many are affected by the stunt in growth.
ReplyDeleteThe oil industry significantly impacts coutnries like Russia because these countries abnk on the fact that since Oil is the largest and most widely used commodity known to man that it is an excellent tax collector. Russia made its biggest mistake by counting on high and widely accepted oil prices because as OPEC stalls a decision tax collection for Russia gradually declines hurting economic growth. When their is literally no money to support government operations, people are further affecting in countries like Russia that depend on the Government for everything. if Russia was a free country it would have been different but the structure of its society refraines it from any actual independency. People of Russia expect the worst, Pray for the best
The reasons for Russia’s decline into recession include being heavily reliant on tax revenues from from the oil industry. This causes it to be very sensitive to price movements. Since the US started supplying oil, the price dropped dramatically and China’s decreasing demand for oil reduces the sale.
ReplyDeleteOil factors into Russia’s problems because of Russia being heavily tied to oil. What was a 1.2% increase in their economy has dropped to 0.8% due to the oil industry. What seems to be stressing the problem even further is that if oil keeps dropping, Russia could be in more economic problems such as the recession predicted.
Russia’s economic development ministry predicts that the economy will decrease by about 0.8% in the upcoming year. This is even when they used to believe that the economy will grow by 1.2%. Russia is heavily reliant on the tax revenues from its oil industry which makes their economy sensitive to price changes within the oil industry. Russia also makes money from household income tax. These incomes are expected to decline as well by 2.8% even though they believed that it would grow by 0.4%.
ReplyDeleteIf the price of oil were $80 / barrel in 2015, the fall in GDP would be the same as their prediction of a decrease of 0.8%. If the price of oil was $60 / barrel in 2015, then the Russian economy would be in a stressful situation. The GDP would also decline by about 3.5% The price of oil had fallen almost 40% since the summer because a surplus of oil.
The main reason that the Russian government is predicting a recession in the coming years is primarily based on falling oil prices. Oil taxes is major income for the Russian government and since the price of oil is at a decline the Russian government is receiving less income and therefore can not balance their budget. If the fall of oil continues to $60 per barrel then the Russia economy would be considered extremely stressed and their GDP would fall by 3.5%
ReplyDeleteThe biggest reason for Russia going into a recession is the decrease in revenues generated by taxes on oil. The fact that they are receiving less money from taxes is making it so that the average household income is dropping and well as the overall GDP of the country, as stated by Chris Weafer. This decline is affecting Russia's problems because they now have less money to circulate in the economy which is mainly going to impact the GDP.
ReplyDeleteRussia recently has slid into a recession, the economy is projected to contract by .8 percent in 2015, even though they initial projection was a growth of 1.2 percent. With the recession, a decrease in disposable household income by 2.8 percent and the decline in value of the Russian Rouble, which fell by 9 percent on Monday. This decline in Russia's economy is mostly because of oil. Since Russia has a heavy reliance on tax revenues from the oil industry, any drop in price can really hurt the economy. Oil prices are down almost 1 dollars since this past summer because of oversupply due to US shale oil production.
ReplyDeleteRussia's economic development ministry predicts that the economy will decline by 0.8% next year. Its reliance on tax revenues from the oil industry makes it sensitive to price movements. Household disposable incomes are also estimated to decline by as much as 2.8%. Russia depends a majority of its income on oil taxes. Since the decline of oil price, Russia is receiving less income and as a result their budget isn't balanced. The GDP would fall by 3.5% if the fall of oil continues to $60 per barrel.
ReplyDeleteThe primary reason for Russia's diminishing economy is the oil prices. More specifically, the decline in the oil prices. In fact it has been predicted that the economy would go down by .8%. The oil prices is obviously important for the economic growth of Russia because of the taxes that comes with it that; so any fluctuations in prices of the oil can have significant impacts on the well being of the economy. Another reason for the declivity of the economy in Russia is the household income taxes are expected to decline by 2.8%, which isn't good because they are dependent upon those as well.
ReplyDeleteOil plays such a huge role in Russia's economical state because Russia relies heavily on it. The decline alone in oil prices hurt the economy, to the point where if it gets to $60 per barrel the GDP would decline by 3.5%.
Western sanctions, in relation to Russian incursion into Ukraine in early March, and falling oil prices have accounted for Russia’s decline into recession. It was previously estimated that the economy would grow by 1.2% in 2015, but revisions estimate a contraction of 0.8% next year. Household disposable incomes are also expected to decline by as much as 2.8% having earlier predicted that they would grow by 0.4%. Russia’s heavy reliance on tax revenues from the sale of oil does it no good as it makes it sensitive to price fluctuations.
ReplyDeleteOil plays a significant role in Russia’s problems because Russia is failing to meet the oil price needed to balance its budget. If the average oil price were $80 per barrel in 2015, the economy would contract by 0.8% as predicted by the economic development ministry. At a stress scenario featuring $60 per barrel, Russia’s GDP would decline by 3.5% to 4%. Such a collapse in price per barrel would be detrimental to Russia. Oil prices have fallen nearly 40% because of an oversupply by US shale oil production. Its demand has also fallen in industrious countries such as China. OPEC met the past week to discuss a cut in oil production to raise oil prices once again, but failed to reach a consensus and will not meet again until June 5th. As for Russia, until the ruble and oil prices stabilize the future does not look bright.
The Russian government has warned that's its economy will fall for two main reasons one the western sanctions and the falling oil prices. First on oil the reason why Russia is taking such a big hit because of the fall in oil prices is because of the fact that it relies so heavy on tax revenue gained from this oil. Without this tax revenue the Russian government will be forced to cut its spending which can hurt the economy. Russia as to try and support the economy will continue and spend more or the same amount seeing as they have a reserve fund, this problematic for two reasons first it's not long term and second it could drive them into debt if the government continues to spend the same as when it had the tax revenue from oil.
ReplyDeleteThe western sanctions could cause investors not to invest in Russia because they see it as a huge risk. Also it should be noted that these western sanctions hurt trade which is also a source of income for Russia.
Russia’s economic development ministry estimates that the economy will decrease by about 0.8% in the upcoming year.Russia relies on the oil industry, so changes in price affects Russia dramatically. With the price of a barrel of oil at $80 it is predicted that the economy will experience a contraction of 0.8% and with the price of a barrel of oil at $60 the GDP of Russian would decline by 3.5% to 4%. This decline is affecting Russia's problems because they now have less money to circulate in the economy which is mainly going to impact the GDP. Coupled along with China's decreased demand for oil, Russia is really hurting.
ReplyDeleteRussia has managed to decrease their economic development, declining into recession. The country is heavily dependent on the sale and production of petroleum. The drop in the price of oil is causing an anticipated drop of 0.8% in the upcoming year. Previous to the drop in the price of oil, it was expected to increase 1.2%. An additional reason for the decline into recession may be due to their reliance on tax revenues. This also makes the country vulnerable to price movements.
ReplyDelete
ReplyDeleteRussia’s primary reason for the economic decline is due to the decline in oil prices due to Western sanctions. The taxes that the government receives from oil prices were specifically important to Russia’s economy. It was predicted that the prices would go down by another 0.8%. Adding to that problem, the income taxes in Russia will decline about 2.8%, another tax on which Russia’s government relies so heavily on. Another factor is the devaluation of the Russian Rouble, which went down in value by approximately 9%. Ultimately. The lack of taxes from the government will cause less money to circulate in the country, causing the country’s GDP to lower.