Can Russia default again?

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:44

Today, the problem of a possible repetition of the default situation in Russia is a source of concern not only for many investors, but also for ordinary residents of the country. The events of 1998 were a big shock for everyone - they largely depreciated the savings of citizens, reduced investor confidence in the economy.

A possible default in Russia is now being discussed both at the expert level and in the media. Not so long ago, prerequisites for the emergence of economic problems arose again in the Russian Federation. This was explained by the significant growth of the dollar, high inflation rates, and almost imperceptible economic growth. The pension issue has become a big problem - the aging of the population leads to the fact that soon the pension system will not be able to cope with the growing load.

However, in the current situation, what awaits Russia can be judged based on world prices for oil and a number of other minerals. It is raw materials that bring the main income to the country, and consistently high prices in the market create confidence that the situation will not get out of control. Moreover, large revenues to the budget create the basis for the creation of a stabilization fund that can be used to solve problems ineconomy. Despite all the difficulties, there are no reasons yet that point to a possible default in Russia. 2012 was associated with such pessimistic expectations, but in the end they did not come true. Most likely, serious problems will not appear this year either.

The main reason for a default in Russia can be called the unstable financial situation in Europe. Since the Russian Federation acts as a full participant in the world market, negative trends in the economy of many European countries have a negative impact on it.

The other most likely cause of default in Russia is the difficulties in the US economy. Default can occur even in the US, which is due to the huge external debt, especially since it continues to grow. The collapse of the American economy will inevitably hit the whole world. Even the allegations that the Russian economy is practically independent of the US economy cannot serve as an excuse. The dependence of Europe is great, and the Russian Federation has the closest economic relations with Europe. The result of the crisis in the US will be a drop in oil prices, and this is the main reason that can provoke a default in Russia.

Recently, Russia became a member of the WTO, and this indicates the stability of the country's economic course. In such a situation, only a corporate default by some large companies is possible - it is explained by the instability of the securities market and significant amounts of debt on loans. However, even this situation willto a corporate default only under the condition of global economic problems in the country. The 1998 default was primarily the result of Russia's internal problems, but a new default, if it occurs, will be largely caused by external unfavorable conditions.