Updated at 17:25,07-01-2021

Will recession strike again?

Nasha Niva

Last week’s end was remarkable with Russian and European financial markets crash. Accompanied by Greece downturn and Spain’s bank problems, the USA added fuel to the fire by publishing its job and unemployment rates what led to stock exchange rates dive.

However, Belarus — which is far away from global stocks — is worried at some other news. The oil prices reduced by 20% in May, 2012. One barrel is around $100, and the prices seem to be ready to cross this ‘psychological barrier’ and swoop even more. The recession hit may come from Russia. Russia lives on oil exports and the price reduction will cause country’s budget deficit. Furthermore, Russian government prepared its prognoses with minimum oil prices of $117/barrel.

The Russians are now experiencing what Belarus has already passed: the demand for FX grew significantly and there already is the lack of it in exchange offices. The golden and FX reserves of Russia satisfy the demand, however the

Russian Ruble has already become cheaper by 15% during the last week.
But what will happen to Belarusian economy if oil prices go below $100? 2008–2009 oil prices collapse led to 20% devaluation of Belarusian Ruble and exports reduction. However, oil prices plummeted from $140 to $40 then.

What if oil will become cheaper now?

The analyst Aliaksandr Chubryk supposes there may be a recession, but not that intense one as oil prices reduce not so rapidly and significantly. The reduction of oil refining profitability also plays its role. A share of this profit is returned to Russia and the share may be cut down, too.

Russia is very vulnerable to fossil fuel prices. Thus, the recession in Russia may boomerang Belarus. GDP growth slowdown and budget deficit may stop some foreign investment programs and supporting Belarus will become a non preemptive issue.

Belarusian Ruble is also under the threat of oil products exports reduction. If the National Bank of Belarus decides to hold ruble exchange rate, the disparities will occur. If the rate is controlled by the market, the ruble will become cheaper.