If escalated, the US-China trade wars may lead to economic slowdown and even recession in Russia, a research conducted by the HSE Centre for Business Tendency Studies (CBTS) ‘Business activity of Russian manufacturing in June-July 2019’ said.
"If the trade conflict between the world’s two biggest economies, the US and China (roughly 35% of world-wide nominal GDP, Russia - about 2%), hits the ceiling and, consequently, growth rates of the economies of mentioned countries all but certain slow down for some period, that will immediately result in a notable decline in global commodity prices and create major difficulties for the main Russian export," TASS quoted experts as saying.
According to the research, the share of fuel and energy goods, metals and timber roughly equaled 80% in Russia’s total export volume in January-May 2019.
"Naturally, the start of such a mechanism will ensure certain problems for the Russian budget, negative volatility on the forex market, deterioration of the inflationary component, probably resulting in economic slowdown and even recession," the authors noted.
However, as of now, experts see no serious macroeconomic, geopolitical and price-related challenges facing Russia’s mining industry.
Expecting global economic crisis
In 2020-2021, 12 years will pass since the latest global financial and economic crisis of 2008-2009, the HSE’s research said.
"The economic theory holds that this period (Juglar cycles) is considered a medium cyclical wave, after which it is necessary to make major capital investment for raising the utilization level of aging capacities and partial change of the technological setup. Such reformation usually result in a temporary recession," experts said.
They believe the ongoing decline of the Investor Confidence Index in a number of developed economies is an indirect sign of the start of such an economic phenomenon.
"Certainly, if the world's top ten countries in terms of nominal GDP enter into the state of economic recession, and even worse - in financial and economic crisis, that will inevitably affect the Russian economy. We all perfectly remember Russia’s ‘global scale’ of the previous crisis (Russia’s GDP dropped 7.8% in 2009, falling the most among G20 countries)," the research said.
Meanwhile, the global economic environment does not seem critical so far, experts stressed, adding that if negative factors intensify pressure, the global economy may dive into recession and even crisis no earlier than within 1 or 1.5 years.