By Clara Weiss
With many indicators pointing to a new downturn in the world economy, high-ranking Russian politicians such as Prime Minister Vladimir Putin and Deputy Finance Minister Sergey Storchak warned of “a difficult 2012” at the start of this year. Despite the growth of the country’s GDP by 4.3 percent, there were already signs of recession in 2011.
Russia is highly dependent on the export of raw materials. Around 40 percent of the state’s revenues come from the oil and gas sectors. The government’s budget dependence on revenues from these sectors fluctuated between 37 and 47 percent in recent years.
Thus, any forecast for Russia’s economic growth depends on the development of oil prices on the world market. The main reason for the GDP growth in 2011 was the relatively high oil price. Experts reckon that an oil price of at least $100 per barrel is necessary to balance the state budget in 2012. Economic growth would require a price of $110 per barrel.
The financial crisis of 2008, which sent oil prices through the floor, led to a deep recession in Russia in 2009. The GDP fell by 7.8 percent and the number of unemployed increased from 4 million in the summer of 2008 to 7 million (or 9.3 percent) at the beginning of 2010. Between October and December 2008, production experienced its worst drop in the history of Russia, plummeting by a record 19 percent. The official inflation rate, which reached over 14 percent in 2008, remains high at 6.1 percent.
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