BEIJING, July 23 (Xinhuanet) -- Starting from today Monday, BizAsia will bring a series of reports on Russia’s economy. Russia depends in large part on its energy abundance, which it exports abroad. However, the country’s energy dealers see their leverage in price negotiations, declining. Analysts say the economic structure of today’s Russia is simply unsustainable; it’s become overly dependent on energy sales, and that has to change.
The Russian Federation is a "Power" house literally. The energy sector is its pillar industry. In last year alone, energy products like oil and gas accounted for 73-percent of the country’s total exports, although energy sales can keep the state coffers steady over reliance on one industry renders Russia highly susceptible to external market fluctuations. This Achilles heel is more evident in today’s global economic environment where commodity prices are volatile. Russia grew just a paltry 1.6-percent in the first quarter this year, and it’s slowest pace in 4 years.
"We are seeing a slowdown in the Russian economy. The reason is that the economic structure of the country hasn’t changed. At the same time the elements that drives the economy forward are disappearing," said Nina Oding, Head of Research Leontief Center.
Europe is a major driver of the Russian economy. However, energy demand from these important buyers west of Russia is steadily declining. What’s more, Russia is facing rising competition from the US, whose energy sector is benefiting from a breakthrough in shale gas discovery and extraction. Experts believe that Russia’s reliance on energy sales is not sustainable. They believe that in the long run Russia’s economic model must change. President Vladimir Putin agrees.
"Russia’s economic growth should focus on three points. Raising productivity, increasing investments and boosting innovation," said Vladimir Putin, Russian President.
Putin has a grand vision of changing the country’s economic structure and reining in inflation. But can this vision be transformed into restoring stronger growth seen earlier in the past decade? That remains to be seen.
(Source: CNTV.cn)
