Is the Russian Economy Recovering with the Help of Oil?
Russia’s economic growth
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Crude oil and energy products are Russia’s major exports. In 2015, they accounted for 63.0% of the country’s total exports, of which crude oil (USO) (UCO) represented 26.0% and natural gas (UNG) represented 12.0%. Since the economy largely depends on crude oil, the fall in oil prices significantly affected its economy in 2015 and early 2016. Crude oil has fallen gradually since September 2014. In early 2016, when global growth concerns increased, crude oil touched a multiyear low of $26.11.
Other exports are metals, machinery and equipment, chemical products, and agricultural products, which represented 10.0%, 7.4%, 7.4%, and 5.0%, respectively, of the country’s total exports in 2015. Russia’s top export partners are Germany (EWG), Italy, China (ASHR), and Japan (EWJ).
In the present scenario, crude oil prices are trading in a narrow range of $47–$52. It seems like crude oil and other commodity prices are showing some stabilization with the current levels. Stabilization in commodity prices, improvement in retail trade, and manufacturing activity have boosted Russia’s economy.
In the next part of this series, we’ll analyze how the Fed’s rate hike could impact emerging economies.