For Russian Economy, August Not April Is The Cruelest Month – OpEd
By Paul Goble
August has begun with yet another decline in the value of the ruble, continuing the trend this summer month set in 1998 with default and continued last year with a decline of eight percent in the ruble’s exchange rate against Western currencies. And the rest of this month this year does not look good.
The Russian economy is not doing well, experts say; and if US President Donald Trump does start a major trade war with China, that will depress the world economy by hundreds of billions of dollars – and have an adverse effect on Russia’s economy as well (sobkorr.org/news/5D48255771432.html and ng.ru/economics/2019-08-04/1_7640_ruble.html).
Oil prices are already softening because of anticipated declines in demand and that will exert downward pressure on Russia’s foreign trade earnings. And new American sanctions on the servicing of Russia’s sovereign debt will cost Russia “billions of dollars,” harming the economy even more.
The likely response of the Russian government, finance minister Anton Siluanov says, will be another devaluation of the ruble, something that will make foreign goods more expensive for Russians but that is unlikely to help the Russian economy which exports few goods and services but only largely unprocessed natural resources.
As a consequence, Russian experts suggest, August 2019 will take its place along earlier Augusts that Russians and the Russian government would much prefer to forget.