As the price of oil has been decreasing, Russia has been suffering a great loss in revenue and is facing a potential recession. This article from the Globe and Mail explains that sanctions have been placed on “[the] lifeblood of the Russian economy” (Globe and Mail) at $95 per barrel, and this price is expected to continue to decrease. Due to these sanctions, the Russian economy is not expected to grow at all for the next three years, and inflation rates are currently at 8%. This obviously poses a large threat to Russian consumers, as the economy faces a potential downfall with little solutions. However, should Russia try to counter the high inflation rates by raising interest rates, Russian businesses and consumers would still suffer.
Although this incident will result in a weakening of the Russian economy, I think that it is strong enough to prevent a financial crisis. Russian banks have predicted a halt in growth until 2017, which is “very realistic and suggests Russia is planning for the long haul” (Globe and Mail). I think what plays the a large role in the fate of the Russian economy are the investors who fuel economic activity. Should citizens lose faith in the currency and stop investing, this would trigger a recession. However, if the government plans ahead and takes the right steps to ensure the security of the Russian economy, I believe that a recession in fairly preventable.