Russian economy in crisis
Ten years after the 1998 Russian rouble crisis, the Russian economy is again on the verge of collapse. The Russian stock exchanged yesterday lost almost 20 percent of its values. At the same time raw material prices drop and inflation is expected to increase.
The development could eventually significantly strain the economic situation of ordinary Russians, and especially weak groups like pensioners and low-salary people.
Stock exchanges yesterday fell like stones all over Europe. However, the two Russian exchanges RTS and MICEX were the worst of all with a drop on respectively 19,1 and 18,66 percent.
The RTS was in the course of the day closed twice, while the MICEX was closed three times, Interfax reports. This morning at 10 am, both exchanges were again closed, RIA Novosti reports.
The dramatic downturn has strongly reduced the value of Russian key companies like Gazprom (minus 20%), Rosneft (minus 24 percent), Lukoil (minus 19,8%) and Sberbank (minus 15,7 percent). Worst off was Norilsk Nickel with a drop of 37,7 percent on RTS and 30,2 percent on MICEX.
Government reaction
The development comes after weeks of government and Kremlin confirmations about the healthy state of the Russian economy. The government is now reported to prepare a new set of measures on the system of state regulation, Newsru.com reports.
At the same time, raw material prices plummet, creating additional problems for the Russian economy. Vital Russian export goods like oil fell to below 90 USD. Also nickel, cupper and other minerals and metals have significantly dropped in the market.
Inflation up
What could be even worse however is that inflation in Russia is expected to pick pace as the rouble lose value and the economic crisis aggravate. According to Newsru.com, the development will make the ordinary Russian cut spending.
For Russians, who thought their economy was back on its feet after years of Post-Soviet chaos, that could be a major blow to confidence.
