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World Economic Crisis 2008: Russia will Outstay
December 26, 2007 18:54

Most people, irrespectively of their religion and nationality, tend to celebrate New Year and hope for the best. The Russians are the same, moreover, the New Year is our main and most beloved holiday celebrated almost in every family. We wish happiness in the upcoming year; raise the goblets for a better future. However, experts who annually release economic forecasts don’t see the future so enthusiastically: they promise $175 for barrel of oil and a serious meltdown in Chinese and U.S. financial markets.

The Saxo Bank’s specialists from Denmark have prepared a regular economic forecast for the next year, though it is stated that some predictions make no pretence to be precise, but give us a chance to think of the future of the financial markets.

 According the analysts, in the upcoming year the world oil prices will reach $175 for barrel, the prices on corn will double and we will have to face a 40% collapse of the Chinese market in August, while American stock indexes will lose 25%. Every third largest American construction company may turn bankrupt, while the British economy will sag.

The question is how often the forecasts issued by the analysts come true. Saxo Bank assures that all their forecasts made for 2007 were right. The good example is the pessimistic forecast covering the construction sector of the U.S. economy. It was supposed that S&P1500 Home Builders Index will reach the mark of 795, but then sharply drop to 521 points at the end of the year. Actually, the results were even more disappointing – 252 points by December.

 The price on oil to a greater extent depends on the international relations than something else. In case of possible conflict involving the USA and Iran, the Strait of Ormuz may be blocked together with 33% of all world oil export transported via the strait.

Russia was lucky not to be mentioned in the Saxo Bank’s dismal outlook. The economy of Russia is developing fast. Besides, the Russian securities market is still undervalued and has got much growth potential. The presidential election of 2008 is likely to play into hands of Russian entrepreneurs and foreign investors putting funds into Russian business. As for high oil prices, they are expected to favorably affect the size of the Russian Stabilization Fund.

The trial by high oil prices will certainly leave its mark on the Russian economy and the Ruble rate, which may finally affect the marketability of Russian goods due to the excessive strengthening the National currency. Thus, though the Russian economy is presently equipped with an “airbag” to keep it from sharp dive, it doesn’t mean this will last forever.


Olga Pletneva

Tags: Russian economy economic crisis    

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