Answer:
Step-by-step explanation:
1. The economy of Russia is largely dependent on oil. At the present moment, Russia is the largest producer of oil in the world. However, as a result of fracking i.e. hydraulic fracturing, American companies are able to refine oil at rock bottom prices. This has led to a drastic fall in the prices of oil in the international market. Hence, Russia’s number one export has been hit hard and as a result, the government revenues are dwindling. As a result of this, the growth forecasts for the Russian economy are capped at a maximum of 2%. In real terms, the economy might be facing a decline.
2. Russia has been suffering from low birth rates ever since the World War era. As a result, the population of Russia has declined steadily over the years. The birth rate is also very low amongst the new generation. As a result, Russia is likely to face a shortage of skilled manpower over the years. Russia is also facing a shortage of skilled professionals in technical fields like computer programming. This is in stark contrast with other emerging nations like China and India who have rising populations and as a result, can keep the wages low. It will be a challenge for Russia to ensure the rapid upskilling of its workforce. However, it needs to be done since it is the only way to stay relevant in the global marketplace.
3. Russia has been consistently devaluing the ruble. There were multiple devaluations in the years 2013 and 2014. These devaluations were done with the intention of shoring up exports. However, the Russian government has been unable to do so. Instead, Russia faced several sanctions from European Union countries as well as the United States because of its annexation of Crimea. This has made it difficult for Russians to import goods at lower prices. Since Russia imports a lot of the food grains it consumes, the sanctions have led to inflation in food prices. The ruble has also seen a decline because of the fall in the prices of oil. To sum it up, the average Russian is facing very high inflation rates. If this issue is not dealt with immediately it could cause bigger problems for the Russian economy and for Vladimir Putin.
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