Category: Russia

FRANKFURT — Few countries have invested more heavily in Russia than Germany has, rushing in to exploit new trade opportunities that opened up after the Cold War ended. More than 6,000 German companies set up operations there, and Russia became a major customer for German cars, pharmaceuticals and machinery. But now the rush is going in reverse. The announcement last week by the German chemical giant BASF that it had canceled a planned deal with Gazprom , the Russian energy giant, involving natural gas extraction and distribution, was the latest example of how German companies are delaying projects and investment. Opel, the car-making unit of G.M. based in Germany, has laid off workers at its plant in St. Petersburg; Volkswagen shut down an auto plant in Kaluga intermittently because of poor demand; and Fresenius, a health care company, canceled a joint venture with Russian partners. More than a third […]

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Russian stocks traded abroad are headed for the biggest annual drop in six years as companies from Yandex NV to OAO Megafon tumble amid a plunge in oil prices that is further slowing an economy already beset by sanctions. The Bloomberg Russia-US Equity Index fell 48 percent this year through Dec. 26. The gauge of the country’s most actively-traded stocks traded outside the country is on pace for the worst performance since a 70 percent rout during the global financial crisis in 2008. Oil, Russia ’s main export, sank into a bear market in October, accelerating the ruble’s 39 percent drop in 2014 and pushing inflation to the fastest in three years. While equities had traded below 2013 levels all year as international sanctions linked to the Ukraine crisis throttled gross domestic product growth, they accelerated losses in late November in tandem with plunging oil prices amid a global […]

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MOSCOW (Reuters) – Russia’s economy shrank sharply in November and the rouble resumed its slide on Monday as Western sanctions and a slump in oil prices combined to inflict the first contraction in GDP since the global financial crisis. The Economy Ministry said gross domestic product shrank 0.5 percent last month, the first drop since October 2009. With oil exports forming the backbone of the economy, analysts said the contraction is likely to worsen. The slide on the oil market accelerated this month after the exporters’ group OPEC refused to cut output, and prices are down almost 50 percent from a peak in June. On top of this, the sanctions imposed over Moscow’s role in the Ukraine crisis have deterred foreign investment and led to over $100 billion flooding out of the Russian economy this year. "With the current oil price we expect things to get worse. There is […]

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A customer counts out ruble banknotes at a food market in Moscow on December 23rd. Credit Photograph by Andrey Rudakov/Bloomberg via Getty The news in Moscow is that everyone has a new television and some people have a new car, but no one has any money or plans for winter vacation travel—or any plans for the future, really. When the ruble collapsed in mid-December, a man went to an Audi dealership to find that only one new car was still available; while he was test-driving the car, someone else bought it in cash sight unseen. Several people told me this story as though it was about a friend of theirs, and it may in fact be true. It is certainly true that large electronics stores have sold out of expensive television sets, which are apparently the durable good of choice in this round of dumping tumbling currency, and instructions […]

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(Reuters/Dmitry Astakhov/RIA Novosti/Pool) Vladimir Putin wants to have his dollars, spend them too, and invade Ukraine. That’s impossible, of course, but he’s trying to make it a little less so with some financial legerdemain that covers up what’s really going on. Putin, you see, is forcing Russia’s companies to spend their dollars instead—but Russia’s government will be on the hook if those firms get into trouble as Russia’s economy implodes. So Putin, in other words, is playing a financial shell game to try to buy enough time for oil prices to rebound and bail him out. Russia’s problem, as I’ve said before , is that it doesn’t so much have an economy as an oil exporting business that subsidizes everything else. And that business is in bad shape now that oil prices have halved the past few months. Cheaper oil means Russian corporations have fewer dollars to turn into […]

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Russia may cut its oil output because of low global oil prices and a lack of investment in the country’s energy industry, Deputy Prime Minister Arkady Dvorkovich said Dec. 25, Xinhua news reported. According to Dvorkovich, Russia’s oil output could shrink by 10 percent over the next two or three years. Dvorkovich predicted that oil prices would remain at the current level or keep falling for a few months before stabilizing around $80 per barrel. At the beginning of December, the Russian government revised down its forecast for next year’s oil exports by 2.19 percent.

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MOSCOW (Reuters) – Slumping oil prices have put Russia’s economy on course for a sharp recession and double-digit inflation next year, government ministers said on Friday, as authorities scaled up a bailout for the first bank to succumb to this month’s ruble crisis. The economy is slowing sharply as Western sanctions over the Ukraine crisis deter foreign investment and spur capital flight, and as a slump in oil prices severely reduces Russia’s export revenues and pummels the ruble. The government has taken steps to support key banks and address the deepening currency crisis in the past week, including a sharp and unexpected interest rate hike, but analysts are pessimistic on the outlook for both the economy and the ruble. Finance Minister Anton Siluanov told journalists on Friday the economy could shrink by 4 percent in 2015, its first contraction since 2009, if oil prices averaged their current level of […]

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The ruble fell, trimming a weekly rally that drove the currency up the most since in 16 years as the government ordered Russian exporters to reduce their foreign-currency holdings to shore up confidence. The ruble weakened 0.2 percent to 52.6600 a dollar by 12:28 p.m. in Moscow, bringing its advance in the past five days to 11 percent, the first weekly increase since the period ended Nov. 23. Government bonds gained, pushing the five-year yield lower for the first time in four days. The Micex Index (INDEXCF) of equities rose for a third day led by OAO Magnit, the nation’s biggest retailer, and natural gas producer OAO Gazprom. Coordinated measures by Russia’s government and central bank have succeeded in driving a 52 percent rebound in the ruble since it slid to a record-low 80.10 on Dec. 16. Gazprom and four other state-controlled exporters were ordered this week to cut […]

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US actor Bruce Willis has been the face of a Trust Bank advertising campaign Russia trebled the size of its bailout of troubled lender Trust Bank to Rbs99bn ($1.9bn) on Friday, laying bare the growing financial fallout from its currency crisis and the slump in the price of oil, its main export. The rapidly rising cost makes the rescue of Trust bank, which foundered as the rouble collapsed early last week, the second-largest seen in Russia. It has now consumed a tenth of the money earmarked by the government last week for bank bailouts. The authorities also said they would spend Rbs320bn ($5.9bn) propping up two other banks. Anton Siluanov, finance minister, said state-owned VTB , the second-largest lender by assets, could receive Rbs100bn before the end of this year and another Rbs150bn in 2015, while Gazprombank could be allocated Rbs70bn. More On this topic IN Europe Moscow said […]

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