Weak ruble and EU sanctions have begun to help the Russian economy – German study
The Institute of German Economics (IW) has come to a paradoxical conclusion, they report today German economic news. It turns out that the weakening of the ruble, low oil prices and EU sanctions will have, according to German economists, not a destructive, but a beneficial effect on the Russian economy in a strategic perspective.
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The publication reports the conclusions of German economists about the uselessness of sanctions: “Russia’s trade balance remains balanced, the local economy is strengthening. The President of Russia can continue the current state for a long time.”
The devaluation of the ruble against the dollar has not led to a decline in the Russian economy - it is coping well, according to German economists from the Institute of German Economics. Even if a barrel costs only $40, it still won't be a disaster.
Now oil prices are about $65 per barrel. A further decline will hit primarily such large oil producers as Canada and Saudi Arabia, as well as Iraq and Nigeria, and only then Russia. The depreciation of the ruble led to the fact that the drop in oil prices did not affect the ruble supply coming into the economy from the sale of hydrocarbons, since oil is sold for dollars, the publication writes. And therefore, Russia can finance its internal expenses through oil sales in full, as before, without producing a deficit.
Importing foreign goods, however, becomes more expensive, but this leads to Russians buying more local goods, thereby developing domestic production. In addition, the decline in exports of American and European goods has the effect of a positive balance of trade as a result of the difference between exports and imports, which has a beneficial effect on the economy. Retaliatory sanctions against European food producers have led to growth in some sectors of Russian agriculture.
Economists at the Institute of German Economics in Cologne come to the conclusion that oil prices may fall even lower, and Russia's trade balance will continue to be positive.
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