INFLATION IN

RUSSIA
BY: CHARLIE, THOMAS, JOHNNIE
WHAT IS THE ECONOMY CURRENTLY
LIKE?
INTRODUCTION TOWARD THE RUSSIA
ECONOMY
• Russia is the largest country in the
world, which occupies about one-
tenth of all land on Earth.
• The economy of Russia has
gradually shifted from a planned
economy into a market-oriented
economy. It contains massive
amounts of natural resources,
particularly oil and natural gas.
WHAT IS CAUSING THIS ECONOMIC
AFFECT?
 REAL LIFE EXAMPLE – RUBEL DEVALUATION

• The inflation rate for product prices in

Russia increased by 371,892.06% since
1993. For example, it costs 1 Rubel for me
to buy a bus ticket in 1993, but now in 2022
it costs 370 thousand Rubel for me to take a
bus; the devaluation of the currency in
Russia is a result of the increase in essentials
and foods’ prices throughout the decades,
which is also named inflation.
REAL LIFE EXAMPLE – RUBEL DEVALUATION

• Russia demonstrates a typical type of inflation.

Russians were producing insufficient supplies, so
the government raises product prices due to its
higher scarcity. However, people cannot afford
higher prices, thus the government must print out
a lot of cashes. Therefore, the cashes that created
from nowhere flows in the market and makes the
currency less worthy.
REAL LIFE EXAMPLE – INDUSTRIAL
DEVELOPMENT
• Russia has been relying on selling underground
natural resources to earn profits. In the recent century,
the Soviet Union (Russia) was addressed as powerful
as United States, but the fact is that the Russia GDP is
even lower than the GDP of Guangzhou province in
China.
• Russia has very undeveloped industries
development and technology, which made it very
uncompetitive across the globe. No countries will buy
their products because there are better substitutes.
HOW IS IT AFFECTING ECONOMIC
PARTICIPANTS?
REAL LIFE EXAMPLE
– UKRAINE WAR
• The war between Ukraine and Russia is bringing
economic impacts to the globe, especially in
emerging markets and developing countries in
Europe and Central Asia.

• The price of fuels and other natural resources are

increasing drastically, which means that industries
like airline suffers from the increased cost and
decreased number of customers.
REAL LIFE EXAMPLE – UKRAINE WAR

• The Russian economy will be in great difficulty in 2022, falling into deep recession. Coface’s updated GDP
forecast for 2022 stands at -7.5% after the recovery experienced last year. This has led us to downgrade the
country's risk assessment from B (fairly high) to D (very high).

• Inflation is occurring globally due to this occurrence; the costs of fuels and commodities
are increasing substantially which will directly impact the net importers of foods and energy and cause the import
price to increase (this phenomenon will be most evident in Asia-Pacific and European regions).

• In this example, the producers in various industries need to endure the higher cost of production and consumers
will need to pay more for products and resources. Moreover, because the life qualities of people decreased, the
support for the government will also decrease.
WHAT ARE POTENTIAL SOLUTIONS
AND OUTCOMES?
WHAT ARE POTENTIAL SOLUTIONS AND
OUTCOMES?
• Monetary policy – When there is an inflation, government can reduce the supply of
cash or money and raise interest rates. When rates are higher, borrowers have to pay
more for the money they borrow, and banks are more selective in making loans, which
means money is more expensive to borrow. As a result, demand for products goes
down, and so as price.
• Fiscal policy – Increase taxes and decrease spending, since Russia's economy is
experiencing an inflation, and this measure by the government can reduce the spending
by businesses and consumers, prices come down and inflation settles.
WHAT ARE POTENTIAL SOLUTIONS AND
OUTCOMES?
• Macroeconomic - Macroeconomic
stability is an important economic
growth factor. This is because
macroeconomic examines the
economy-wide effect of inflation. In
order the stabilize the macroeconomic
in Russia, Russia first needs to settle
the inflation and gradually decrease
interest rates to increase spending
power of consumers.