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Case Title:

Resurgence of Russian Economy: Can it sustain?

Publication Year : 2010

Authors: S Korra, BGopal and S Chaganty

Industry: General Business

Region:Russia

Case Code: ECC0050IRC

Teaching Note: Not Available

Structured Assignment: Not Available

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Abstract:
overcome the transition recession of 1990s and the ruble crisis of 1998. During the 1990s, Russia experienced an inevitable transition recession because of its changeover from socialist economy to market-based economy. Furthermore, there was liberalisation of prices in the new transition economy, which led to severe inflationary conditions in the economy. The inflation rate was over 2000% in 1992 and over 800% in 1993. As a result, Russia lost close to 30% of its real gross domestic product (GDP). Later in 1998, the economy was caught in severe financial crisis, which was triggered by the Asian financial crisis of 1997. Though Russia experienced major problems during 1990-1998, it revamped its economy in early 1999 with the implementation of structural reforms in the country. Further, the surge in oil prices in 2000 was a major gift to Russia since it had abundant hydrocarbon reserves. This has also helped Russia to build and maintain an average rate of economic growth of 6.7% during 1998-2007 and resulted in a $1 trillion economy. However, Russia witnessed hurdles because of its aggressive foreign policy and weaknesses in its structural reforms. Apart from this, the economy would need to invest around $203 billion to sustain its oil production, which was the major source for Russian resurgence. The weakening of oil prices is another hitch. With all these problems, it is doubtful whether Russia will be able to sustain its resurgence in the long run.

Pedagogical Objectives:

  • To an overview of the Russian economy up to 1990s.
  • To the transition recession faced by Russia in 1990s.
  • To the Russian financial crisis of 1998.
  • To the Russian resurgence from the recession in 1990s and the currency crisis in 1998.
  • To the challenges in sustaining Russian resurgence in the long-run.

Keywords :  Russia, Resurgence, Socialist economy, Transition regression, Financial crisis, Currency crisis, Rouble (Ruble), Hyperinflation, Capital flight, Soviet Union, Energy resources, Foreign policy, Structural reforms, Privatisation, Oil exports

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