How Bad Is Russia's Economy Today?
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The Russian economy has been in a constant state of decline for several years now, with no clear end in sight. This article will take a closer look at the Russian economy as it is right now and how bad things are really getting. It also will talk about some possible causes for this downfall and what you can do to help fix the situation.
The Russian economy has been shrinking since around 2015. Since then, the average person has been suffering through shortages and empty shelves due to a lack of supplies and raw materials needed to make products. There have even been cases where there were none left after they were all sold out!
This goes beyond just food and clothing though. All areas of the market suffer from a shortage of something or other that people need to survive daily life. These items include goods such as medicine and fuel, and services like electricity and transportation.
When these get shorted, people start protesting by not buying them which only makes the problem worse. Businesses lose money because they cannot sell their product, and individuals lose hope in the future. People begin to give up and go along with whatever fate throws at them, instead of acting together and solving the problem.
The country is in a deep economic crisis
In fact, even those who are actively supporting Putin’s regime acknowledge that his government has failed to revive the economy.
Since coming to power in 2000, Vladimir Putin has been surrounded by loyalists who share one common goal — keeping him in office. He rewards this loyalty with extravagant gifts and promotions, which only increase as he consolidates more power.
This system of patronage works well until it doesn’t. When these bureaucrats run into trouble, they look to their leader for help.
When Putin can’t or won’t provide it, they are out – unless they have paid up before then. This creates what some call an ‘emergency pensionocracy��’ where members of the elite get richer while the rest remain stagnant or lose money.
Russia’s middle class is shrinking rapidly, but there’s a way to fix that. Here's how
In recent years, average Russians have seen their income shrink due to rising prices caused by international sanctions against Moscow over its aggression towards Ukraine and Syria.
The price rise has disproportionately hurt ordinary people because most goods are imported. According to state statistics agency Ria Novosti, food imports almost doubled between 2014-15, from $8 billion to nearly $14 billion.
Russian officials often cite such figures to argue that Western countries impose unreasonable restrictions on trade, but independent economists say the data is poorly sourced and manipulated.
Russia has the largest number of billionaires in the world
While it is true that Russia’s economy is struggling, it is important to realize how many millionaires and billionaires Russia currently boasts. In fact, there are over 1 million millionaire Russians! This makes sense when you consider that around 80 percent of Russian adults have access to a smartphone, making it easy to stay connected and business friendly.
With this growing wealth comes more spending money, which can help improve the country’s economic outlook. Recent reports show that wealthy Russians are investing in international real estate and luxury goods, which creates new jobs for overseas professionals and opportunities for small businesses in developing countries.
Furthermore, since most Russians are self-employed or work for state owned companies, they spend their hard earned cash very efficiently. They often live below their means and don’t waste money on unnecessary luxuries.
Half of Russians are living below the poverty line
More than half (55 percent) of Russian citizens live in absolute poverty, according to data from the government agency Rosstat. This means that they do not have enough money for food, shelter, health care, education, or personal hygiene items.
This is more than any other country in Europe except Greece where it was 65 percent in 2016. In fact, it’s higher than most countries outside of Africa.
In 2017, there were 32 million people in Russia who lived in absolute poverty. That’s over one-fifth of all people in the country!
The average person spent 830 rubles ($12 at current prices) per day in 2015, which isn’t very much given how expensive Russia can be. A decent sized bagel costs around 5 rubles, and a cup of coffee about 3 dollars.
There are frequent power outages
Power outages in Russia have become so common that people no longer even notice them. According to data from Russian state run research agency RANE, there were 169 large-scale power cuts across Russia last year alone — an average of more than eight per day!
This is around three times higher than during 2008 when the then president Vladimir Putin cut off electricity to almost half of the country as part of a bid to save it.
In some cases, these blackouts can be deadly for those who rely on medical equipment or cars that don’t work without power.
The situation has gotten worse since 2016, with experts warning that we could see a total breakdown of services within six months.
Russia currently has one of the most expensive energy systems in the world. It takes up to ten days to restore normal supply after a blackout because companies need time to repair damaged facilities before they get back into business.
And while oil prices remain low now, they will eventually rise – leaving countries like India that heavily depend on imported fuel struggling to pay for their own energy.
Healthcare is inadequate
As we have seen, healthcare in Russia has been slowly deteriorating for years now. This article will go into more detail about what kind of care you get depending on how much money you have to spend. If you are fortunate enough to be able to afford medical treatment, great! But even then there are serious limitations.
In this article I will talk about two things: First, what kinds of healthcare you can expect if you do not have very much money. And second, what kind of healthcare you can expect if you do not live in Moscow or St Petersburg.
I will also discuss some of the problems that are unique to Russian healthcare – like how expensive drugs are and how difficult it can be to find them.
We’ll close by talking about why bad health outcomes are common in Russia and some potential solutions.
Corruption is widespread
Recent events clearly show that corruption in Russia has never really gone away, nor have people’s trust in the government been restored. Since Vladimir Putin returned to power in 2012, there have been an ever-increasing number of reports about officials taking large sums of money for their personal use or to redistribute to friends and family members.
Corruption can take many forms. It may be outright bribery, where someone is paid directly to promote a certain product or service. This may happen at every level of society, from senior executives to low ranking employees. Or it may involve underhanded practices such as offering employment only to those who pay up.
There are even cases of corrupt politicians using state resources for personal gain, something that is especially prevalent in countries with little respect for rule of law. The Russian media has a very negative view of most public servants, making it easy to believe that anyone in authority could be dishonest.
Another common way that corruption manifests itself in Russia is through “kleptocracy,” whereby powerful individuals steal money intended to help the less fortunate. Instead, these wealthy elites spend lavishly on themselves while others suffer needlessly.
These excessive spending habits often look similar to what we refer to as “corruption lite.” For example, hiring expensive private jets rather than using regular airlines, ordering luxury cars instead of normal ones, and staying at top tier hotels instead of moderate budget options.
The Russian ruble has lost more than half of its value against the US dollar
Following is an embarrassing list of hard times for the Russians, their country’s economy being in worse shape than ever before. With every passing day, the situation becomes more dire as people lose trust in the currency and the government that uses it.
The Russian ruble has fallen so much over the past two years that it now costs twice as many dollars to buy a given amount of merchandise. This means that anyone wishing to purchase goods or services will be paying higher prices later on.
On top of this, there are very few places where one can exchange rubles for other currencies. Some banks actually charge fees when you request such a transaction.
This makes it difficult to save money by exchanging your rubles for euros or another currency. Due to the limited number of options, most people just keep their money in the ruebal at home.
Another factor hurting the value of the ruble is high inflation. According to the Central Bank of Russia, the annual rate of price increase was 9% in May 2018.
That’s right – almost one tenth of the cost of everything goes up each year! Because of this, those with savings spend a lot of time trying to find ways to protect what they have.
There are not enough jobs
Over the past decade, employment in Russia has decreased by around 25% – that’s one million lost positions! The average monthly salary has also declined sharply since then, with many workers receiving pay cuts of up to 50%.
This is bad for individuals who have little money saved and can’t afford to live on what they earn. It’s also bad for the economy as a whole, because people without work don’t spend their income - thus limiting consumption and investment.
Russia’s GDP fell by more than 6 percent between 2008 and 2012, so it would be wrong to describe the country’s economic situation as ‘stable’ back then. But even during this period there were signs that things could get much worse.
In fact, some experts believe we may now be at the beginning of an extended downturn.