Putin in New Territroy as Russia Faces Looming Economic Downturn

In recent years, Putin’s popularity has risen dramatically due to his promises to restore Russia to the level of international prowess it held for much of the twentieth century. However, this support may soon wane as recent reports coming out of Moscow have predicted an economic recession next year.

A nine percent increase in inflation, low oil prices, and a depreciation in the Ruble are all to blame for stumbling economy. Capital flight out of the nation could be more than $100 billion.

In response to the gloomy economic predictions, Vladimir Putin has halted several projects the government was planned to undertake this year such as the South Stream Pipeline, which would ship gas to directly to southern European countries, and a high speed railway from Kazan to Moscow.

Putin faces significant political obstacles as the Russian economy is expected to enter a recession this upcoming year.

Putin faces significant political obstacles as the Russian economy is expected to enter a recession this upcoming year.

Some experts are expecting Putin to soften his anti-Western rhetoric. However, some believe that the president, in an effort to remove attention from the woeful economy, may actually ramp up his his “patriotic” endeavors.  Moscow may try to divert the blame away from policy decisions to American and Western domination.   The famous economist, Sergei Guriev, who fled Russia recently, notes that Putin is in new territory as he has been the beneficiary of good economic luck with regards to oil prices in the past.

The Russian economy is quite dependent on oil. In fact, this natural resource accounts for more than half of the nation’s exports. Despite the plummeting price, Russia’s oil dependency is not the most pressing issue facing the nation.  Russia owes almost $700 billion to banks in the West. Unfortunately, the sanctions by much of Europe and the United States due to Russia’s aggressive behavior has cut off access to western financing. Chinese banks simply do not have the capacity to serve as a viable alternative.

It seems that Putin’s popularity is already in jeopardy in some circles in Russia. A popular business newspaper published an article last week comparing the president to the infamous Robert Mugabe of Zimbabwe due to their lack of response to currency devaluation. Mugabe did nothing as the value of his currency plummeted to the ludicrous rate of four trillion Zimbabwe dollars to a single American dollar.   Regardless, the Russian economy is quite sick. Only time will tell if Putin’s future policy decisions will end up helping or act as detriment to the nation’s economic well being.

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