Birgit Hansl, Lead Economist and Program Leader for the Russian Federation at the World Bank

May 6, 2016

The Russian economy was hit hard in 2015 by a dramatic drop in the price of oil—the country's chief export commodity—and by sanctions imposed against the nation by the United States and the European Union resulting from the annexation of Crimea. During an event outlining the World Bank's latest report on the Russian economy, Birgit Hansl acknowledged that the road to recovery will be lengthy and difficult.        

Double-digit inflation and real wage stagnation has led to decreases in household consumption and lack of investment. The result has been six consecutive quarters of recession in Russia. One bright spot in the data was the Central Bank of Russia's policy response to the recession, which was to free float the currency, allowing the ruble to devalue in order to reduce the harshest effects of the downturn.

Hansl concluded by pinpointing areas of concern for Russia and why there will be little potential growth in the short and medium terms. These concerns include too much reliance on oil exports, lack of economic policy options as foreign reserves run short and fiscal expenditures run too deep, financial instability, and investment constraints.