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Economic Forecasts: Russia Experiences a Recession
December 30, 2018 00:12


Russia is at the final stages of its economic cycle and experiences a recession, as the analysts of the “Vanguard” investment company noted in their forecast of the world economy for 2019.

“As long as the world economy continues to grow for the tenth year in a row, the fears about the inevitable forthcoming recession only increase”, the authors write. “Several factors at once indicate that it will happen as early as in 2019. The most probable scenario is a slowdown in global growth, which will be led by the United States and China”.

In their study, analysts are based on the theory of economic cycles. According to it, long-term economic growth is inevitably replaced by a recession due to overproduction of products and falling demand, and correspondingly, the fall in prices. Company profits are decreasing. However, then the economy recovers again, due to the fact that bank interest rates decrease due to the lack of demand for loans, enterprises invest borrowed funds into production, and low prices that have reached their bottom provoke demand from the population, including deferred demand.

Read More Articles about Business and Economy in Russia

The authors also consider such risk factors as the growing base rate of the Federal Reserve System (FRS) of the USA, the US-China trade war, and the US tax reform, due to which the budget does not receive enough tax revenue. However, according to “Vanguard”, not all countries are currently experiencing a recession. Recession is characteristic of Russia, Mexico and South Africa. At that, the first two countries are at the beginning of the last, fourth phase of the cycle, whereas South Africa is at the end of that phase.

At the same time, the USA, China, Canada and Australia are currently experiencing the third stage - the beginning of the recession. The European Union, India, the United Kingdom and Japan still have potential for growth, Brazil is just beginning another cycle, being at the first phase now.

Author: Anna Dorozhkina

Tags: Russian economy Russian business    

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