The Essence of Optimism of The Economists and Investors with Regard to the Economy of Russia

Source:
By:TENKOVSKAYA LYUDMILA IGOREVNA

DOI: https://doi.org/10.30564/jesr.v2i4.1080

Abstract:

The gross domestic product of Russia, expressed in US dollars, indicates problems in the Russian economy associated with the decline in oil prices on the world energy market and the consequences of the sanctions of the United States and the European Union against Russia. The crisis situation of the Russian economy has a negative impact on the income of the population of country, represented mainly by wages. However, an economist or investor may be optimistic about Russian economic development in the medium term. This optimism is related to the economic policy of the United States. The expansion of the United States economy within the global space, based on economic growth, requires maintaining inflation within the target level and weakening the US dollar. These tasks are solved with the help of soft monetary policy of the US Federal Reserve System. The reduction of interest rates by the US Federal Reserve System against the background of inflation of the target level and the devaluation of the US dollar will contribute to economic growth in the United States, because it will lead to the depreciation of public debt, lower consumption of imports, increase in exports and trade balance, growth of production, income, consumption. The economic policy of the United States, which contributes to the devaluation of the US dollar, will also reduce the US dollar against the ruble. The optimistic view of investors-economists on the Russian economy is due to a significant strengthening of the ruble against the US dollar. Consequently, in the medium term, the gross domestic product and wages of citizens of Russia, expressed in US dollars, will significantly increase, and the purchasing power of the national currency of the country will also increase. This growth may continue until the next election of a new President of the United States in november 2020. After the election of the new President of the United States, there is a high probability of sanctions against Russia and of decline in oil prices in the world energy market in accordance with the future economic policy of the United States – two main reasons for the sharp strengthening of the US dollar against the ruble, which will cause a deeper economic crisis in Russia in the medium and long term.

References:

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