Russia needs to explore export revenue from products outside the energy sector as the economy suffers for a long period from low oil prices, Russian Economic Development Minister Alexei Ulyakayev said. He added “the ministry needs to develop an economic foundation outside the energy sector if it’s to endure the weakened oil economy”.
Russia relies heavily on exports of oil and gas for government revenue, leaving its economy vulnerable to lower energy prices. Crude oil prices are 50% percent lower than this date in 2014 mainly because of the increase in global oil production.
According to Bloomberg, most economists said that lower oil and gas prices are next year’s biggest risk for Russia, which is unprepared to ride out another shock on the oil market. Other dangers for 2016 include geopolitics, strains in the banking industry and the ruble.
Further complicating the outlook are geopolitical tensions that followed the downing of a Russian warplane by Turkey in Syria last month and pushed investors to sell Russian assets. In addition to events in the Middle East, Russia also has to contend with international sanctions over the conflict in Ukraine.
The ruble is down almost 32% against the dollar since the central bank shifted to a free-floating regime in November 2014. That’s the third-worst performance among its emerging-market peers after Brazil’s real and Colombia’s peso.