What were the views of Russia’s coal industry 5 years ago? Read it below.
Russia ended 2005 with its seventh straight year of growth, averaging 7% annually since the financial crisis of 1998, although high oil prices and a relatively cheap rouble are important drivers of this economic rebound. Since 2000, investment and consumer-driven demand have played a noticeably increasing role. Real fixed capital investments have averaged gains greater than 10% over the last five years, and real personal incomes have realised average increases over 12%. During this time, poverty has declined steadily and the middle class has continued to expand. Russia has also improved its international financial position since the 1998 financial crisis, with its foreign debt declining from 90% of GDP to around 31%. Strong oil export earnings have allowed Russia to increase its foreign reserves from only USD 12 billion (Bn) to some USD 180 Bn at year end 2005.
These achievements, along with a renewed government effort to advance structural reforms, have raised business and investor confidence in Russia’s economic prospects. Nevertheless, serious problems persist. Economic growth slowed to 5.9% for 2005 while inflation remained high. Oil, natural gas, metals, and timber account for more than 80% of exports, leaving the country vulnerable to swings in world prices. Russia’s manufacturing base is dilapidated and must be replaced or modernised if the country is to achieve broad-based economic growth. Other problems include a weak banking system, a poor business climate that discourages both domestic and foreign investors, corruption, and widespread lack of trust in institutions. In addition, a string of investigations launched against a major Russian oil company, culminating with the arrest of its CEO in the autumn of 2003. The acquisition of the company by a state owned firm, have raised concerns by some observers that President Putin is granting more influence to forces within his government that desire to reassert state control over the economy. State control has increased in the past year with a number of large acquisitions. Most fundamentally, Russia has made little progress in building the rule of law, the bedrock of a modern market economy.
In 2009, the country was badly affected by the global economic downturn and reported negative growth of its GDP of 7.9%. Plummetting oil prices and a fall in foreign credits hit the country. The Central Bank of Russia spent approximately USD 200 billion in 2008 to slow the devaluation of the rouble, matched by a USD 200 billion rescue package by the Russian government to increase liquidity of banks and to bailout Russian businesses with large foreign debts.
On the plus side, in 2009 Russia was the world’s largest exporter of natural gas, the second largest exporter of oil, and the third largest exporter of steel and primary aluminium.
Early signs that the economy was improving were noted in the second half of 2010. However, a shrinking workforce, a high level of corruption and poor infrastructure are significant barriers to the economic development of the country.
Poor grain yields from fires and droughts resulted in the Russian government taking a dramatic step and banning grain exports in August 2010.
