By Daniil Chen
Today, the Russian Federation has tense relations with both the European Union and the United States. This is mainly the result of series of political events; however, the most crucial one was the annexation of Crimea Island. It is important to keep in mind that this is a sensitive issue and that there are many factors involved. It has been a year since the US and EU imposed economic sanctions on Russia. How have the sanctions impacted development of the Russian economy?
Russia’s economy was negatively affected by the sanctions.Looking at the GDP annual growth rate of the country, in 2014 it was only 0.7%, compare to 2013 (right before the sanctions) when it was 2%. The forecast for current year is even worse: 0.6%. Inflation has intensified the situation.For example, Russia’s inflation rate in February of 2015 was 16.7%, which is even higher than the highest rate –15.1%– during the financial crisis in 2008. A 45% drop in oil prices also contributed to some of the slowdown. This year –2015– Russia’s food inflation rate was 26.1%. The unemployment rate continues to soar up reaching 5.8%, therefore about 4.3 million of people don’t have a job. Due to many different factors, the Russian economy has been experiencing a slowdown which has the potential to impact development.
According to Levada-Center, a Russian non-governmental research organization, 79% of the population feels the burden of Western sanctions. 34% of all the people faced serious problems, created by economic constraints. 12% did not have any changes in their lives at all. As you can see from these statistics, majority of Russian population has financial difficulties because of the sanctions.
To sum up, the economic situation in Russia is quite difficult right now. People have lost jobs, food prices are increasing and the country is experiencing different economic problems. Nevertheless, citizens are still keep a stiff upper lip and try to deal with challenging situation in the country.
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