Publication: Russian Economic Report, No. 35, April 2016: The Long Journey to Recovery
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2016-04-08
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2016-04-08
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Russia’s anticipated economic recovery was delayed. In 2015 the Russian economy began its difficult adjustment to the severe global oil-price shock and the imposition of economic sanctions in 2014. The impact of these twin shocks drove Russia’s economy into a deep recession, which reached its nadir in the second quarter of 2015. Following a brief rally early in the year, a further decline in global oil prices in August 2015 derailed an anticipated recovery, and annual real GDP contracted by a total of 3.7 percent. This report series is produced twice a year by World Bank economists in the Macroeconomics and Fiscal Management Global Practice.
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“World Bank Group. 2016. Russian Economic Report, No. 35, April 2016: The Long Journey to Recovery. © World Bank. http://hdl.handle.net/10986/24028 License: CC BY 3.0 IGO.”
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Publication Russian Economic Report, April 2015(Washington, DC, 2015-04)Russia's economy experienced two shocks in 2014. On top of the structural crisis that began in 2012, Russia had to deal with cyclical and idiosyncratic challenges to the economy. One of the new shocks illustrates Russia s integration into the world economy through its natural resource exports, and thus its dependence on the global commodity cycle: oil prices more than halved between July and December 2014, giving Russia a terms-of-trade shock. The ruble lost 46 percent of its value against the US dollar, which worsened already eroded business and consumer confidence. The monetary tightening in response made credit expensive, further dampening domestic demand. The other, more idiosyncratic, shock was related to the geopolitical tensions that began in March 2014 and led to economic sanctions. The tensions not only heightened perceptions that Russian investments had become riskier, they also dramatically increased the costs of external borrowing for Russian banks and firms. Spreads on Russian credit default swaps peaked in December at 578 basis points, compared to 159 a year ago. Together with the financial sanctions imposed on Russia in late July, which have restricted the access of Russia s largest state-connected banks and firms to Western international finance markets, this all but extinguished investment. The current World Bank baseline outlook, however, sees the national poverty rate increasing from 10.8 percent in 2013 to 14.2 percent in 2015 and 2016. Poverty is expected to increase because real disposable income and consumption will decline. This would be the first significant increase in poverty rates since the 1998-1999 crises. Russia weathered the 2008- 2009 crisis well as disposable incomes continued to grow slightly. Given the current limited fiscal space, additional support for the poor and vulnerable is likely to be less generous than it was during the 2008-2009 crisis. Although people at the bottom of the income distribution are the most vulnerable, there will be less opportunity for an increase in shared prosperity in 2015-2016, and there is a worrisome possibility that recent achievements might be reversed.Publication Russian Economic Report, No. 29, Spring 2013 : Recovery and Beyond(Washington, DC, 2013-02)Russia's economy grew 3.4 percent in 2012, down from 4.3 percent in 2011. The economy of Russia slowed in the second half of the year due to weak net exports, negative base effects, and destocking at the end of the year. More than four years after the global financial crisis hit, the world economy remains sluggish. Industrial production lost momentum throughout last year, exports expanded only at a moderate pace, and imports even declined for three month during autumn 2012. Growth declined mainly due to weaker performance of investment. Inventories were flat as the restocking cycle after the crisis came to an end, and fixed investment expanded only moderately as business remained cautious about future prospects. The weaker performance of the tradable sectors reflects sluggish global demand and the poor agricultural harvest but also low competitiveness in parts of the industry, as growth declined for all three subsectors. The capital account strengthened in 2012 as net capital outflows decreased. According to preliminary estimates, the capital account deficit amounted to US$40.9 billion or 2 percent of Gross Domestic Product (GDP) in 2012, compared to US$76.2 billion or 4 percent of GDP in 2011. The labor market remains tight. The unemployment rate declined across the country, and vacancy and replacement rates increased. The number of poor people in Russia reached a record low. In the first nine months of 2012, some 17.2 million of people were below the poverty line, three million less than a year ago and the lowest number in the last two decades. The weak external environment, high inflation, flat oil prices and sluggish domestic demand are set to postpone a pickup in growth towards the second half of 2013. Nevertheless, modest growth and lower inflation are projected to reduce poverty further.Publication Russian Economic Report, No. 26, September 2011(World Bank, Washington, DC, 2011-09-14)Russia's economic growth slowed in the second quarter of 2011 as the inventory restocking cycle waned. High oil prices have kept the external current account in surplus but capital outflows continue. Gradually improving labor market conditions and access to credit and external borrowing are supporting domestic consumption but consumer confidence and external risks are constraining a more robust growth in domestic demand. Inflation is on a downward trend because of seasonal factors. The short-term fiscal situation is favorable mainly because of high oil prices with an almost balanced budget this year. But a large non-oil deficit requires concerted medium-term fiscal adjustment to replenish fiscal buffers and to move toward long-term sustainable levels of the non-oil deficit.Publication Thailand Economic Monitor, April - June 2009(Bangkok, 2009)A solid financial armor could not protect Thailand against the impact of the global financial crisis on its real economy. Despite a sound banking system and low external vulnerabilities, the Thai economy contracted 5.7 percent between October 2008 and March 2009, as the magnitude and speed of the contraction in foreign demand, and resulting shock to the real economy, has been greater than anticipated. There continues to be little impact of the global financial crisis on Thailand's banks: liquidity remained adequate as financial institutions did not face solvency concerns given their adequate capitalization and lack of exposure to 'toxic' assets or risky derivative contracts. The combination of a sound financial sector, low external roll-over and balance-of-payment financing requirements, and, more recently, large current account surpluses, has led to capital inflows, build-up in reserves and an appreciation of the Baht relative to other currencies in the region. However, the impact of the global crisis on the real sector was far more severe than expected. Export volumes contracted by 8.9 percent in the fourth quarter of 2008, compared to the World Bank's forecast in December of a 3.0 percent expansion. Exports contracted a further 16 percent in the first quarter of 2009. The aggravation of Thailand's political crisis, which had been dampening investor and consumer confidence since 2006, compounded the shock to the real economy. As a result, real gross domestic product (GDP) contracted in the fourth quarter of 2008 and first quarter of 2009 after 38 quarters of growth, and is expected to contract for 2009 as a whole, the first annual contraction since the Asian financial crisis of 1997-1998.Publication Thailand Economic Monitor, April 2011(World Bank, Bangkok, 2011-04)The pace of economic activity is gradually returning to pre-crisis levels. After a roller-coaster of sharp drops, vigorous rebounds and mild contractions, Gross Domestic Product (GDP) was up 4.8 percent in the last quarter of 2010 on a seasonally-adjusted annualized (SAAR) basis, closer to pre-crisis, normal levels. For 2010 as a whole, GDP expanded by 7.8 percent from 2009. Growth was broad-based, with significant contributions from external and domestic demands. Thailand's economy is one of the most energy intensive in the region because of the large (and growing) share of energy-intensive manufacturing in the economy and high proportion of cargo transported by trucks. Thailand can reduce its vulnerability to oil price shocks by raising fuel standards, improving tax incentives for conservation and relying more on rail for cargo transport.
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