Oil prices continue to fall, the "Western world" has developed sanctions to put pressure on Russia. Western experts predict that Russia is inevitably heading towards a deep recession. Some financial analysts assure the world community that the crisis in Russia will not affect Europe and the United States at all, but to what extent such statements are true.
Russia depends on oil
In 1998, the entire population of Russia felt how the decline in world oil prices could affect the economy of the state. It was this year that the oil price fell by 58%. As a result of the fall - a reduction in oil exports and the inability of Russia to make mandatory payments on sovereign debts.
Unfortunately, more than 15 years have passed and the conditions have not changed. Today, oil exports account for about 39% of the total. A sharp drop in oil prices, coupled with economic sanctions, has already caused a slowdown in the Russian economy. According to analysts' forecasts for 2015, the Russian economy will continue to decline.
If you look back and remember the past, then based on the experience of the 90s, everything should stop in Russia.
When experts warn Europe that a slowdown in the Russian economy will have a profound effect on the entire world economy, the answer is “no, this simply cannot happen”.
However, there is one illustrative example in history when a crisis in one small state spread to other countries of the world, and something happened that very few economic experts assumed.
Thailand's economic crisis in 1997
In 1997, Thailand's economy represented an even lower percentage of world GDP than Russia today, but the sharp drop in the stock market and the exchange rate of the national currency of this Asian country, very much frightened investors around the world.
As the Thai economy began to drag itself into recession, exports to that country began to decline. The economies of eight of the nine countries in Southeast Asia contracted sharply. At the time, only China was able to withstand and stave off a recession. US exports to Southeast Asia fell 10%. This is how the crisis of one country broke out and affected almost all world markets.
Trade flows slowed, demand for goods declined and oil prices fell 58%. Countries that are directly dependent on energy exports have entered a recession, and some have come close to it. Among them was Russia.
What's going on now
Export to Russia is of great importance for the economies of the Eurozone countries. The exports of the European economy account for 6.9% of all European exports. For the USA, export to Europe is very important. It accounts for 17.5% of all US exports.
Do not think that the crisis in Russia can immediately strongly affect global markets. It is unlikely that the US market will change its upward movement, but there is some good news.
The Russian economy is not in such a deplorable state as in 1998. The country has a positive trade balance, low debt burden and no budget deficit. High inflation hits the pockets of ordinary citizens, but citizens will buy more domestic goods in order to save money. Domestic business will begin to adapt to the new economic conditions. It turns out that economic recovery is just around the corner.
It is believed that the price of oil in 2015 will return to the level of the mid-2000s and the crisis in the Russian economy was created artificially. This means that in the coming months the market must regulate everything itself. True, given the difficult political situation in the world, it is difficult to make any long-term forecasts.
