WSJ: the Russian economy has withstood where others would collapse

With the decline in oil prices and depreciation of the national currencies of the economic policy of the government plays an important role. The Russian Central Bank is taking adequate measures to address the situation, writes The Wall Street Journal.

MOSCOW, 25 Jan. Russia cope with such economic problems from which many other developing economies would collapse, writes The Wall Street Journal.

It is obvious that she is going through tough times: geopolitical risks are high, the sensitivity of the economy to price fluctuations on oil and gas markets of great Western sanctions continue to apply, as growth opportunities are weak. According to the International monetary Fund (IMF) the GDP of Russia in 2015 decreased by 3.7 per cent in 2016, it is expected to fall by a further one percent. However, Russia was able to withstand the cessation of lending on the background of sanctions, the article says.

To resolve the situation, the Central Bank of Russia has taken a number of actions. First, the Central Bank permitted the availability of fluctuations in the exchange rate and increased interest rates on its operations. In December 2014, the regulator increased the key rate to 17 percent. Inflation in December amounted to 12.9 percent. The Central Bank expects that by 2017, inflation will amount to four percent, the newspaper reminds.

The fall in oil prices and the associated fall of the ruble pose to the Russian Central Bank a new challenge: how to preserve the level of trust that has been achieved on the background of the fight against inflation. While the Central Bank “is approaching the situation from a position of relative power,” the article says.

Meanwhile, fears for the ruble is much weaker than, for example, the Turkish Lira, although the Turkish economy would have to win on the background of falling oil prices. Unlike the Russian currency, the Turkish currency collapsed by 12 percent, and by 3.2, but this was also a record collapse. Ankara will not halt the depreciation of the Lira since mid-2013, despite the economic growth, WSJ indicates.

The main threats to the Turkish economy emanate from the authorities of the country. The Turkish Central Bank has abandoned promises to normalize its policy, and this raises doubts about whether he will be able to pursue a policy of inflation targeting, which still could not cope. In addition, there are concerns over the actions of President Recep Tayyip Erdogan – he is seeking to amend the country’s Constitution that will strengthen his power, writes the edition.