Triple Assault On Russian Economy Triggers Inflation

Inflation in Russia could hit as high as 17% by the end of the year, the country’s government has warned.

The statement is interpreted as a confession that a triple assault on the economy is proving more difficult to handle than first thought in the Kremlin.

Russia has huge financial problems tackling a budget based on oil selling at more than $100 a barrel when the price has dropped to around the $50 mark.

On top of that, oil producing countries are in a war for market share, with Gulf State producers upping production despite a glut of oil on the market pushing the price down.

Oman has pledged to turn on the taps to output 20,000 more barrels a day.

Cash mountains

While the Gulf States have cash mountains as a bulwark against economic difficulties, Russia is facing problems triggered by economic sanctions between the European Union and USA over the conflict in The Ukraine that led to the annexation of The Crimea.

At the same time, these economic factors are pushing down the value of the rouble, leading to foreign firms pulling the plug on selling goods in Russia and prices of exports rising.

Besides Russia, Argentina seems to have ever-present inflation.

The local media is reporting shortage of stock in the shops and is blaming the government’s poor handling of international debts that has depleted foreign currency reserves for the problem, according to expat pay and benefits firm ECA International.

Inflation is running at around 40%, although the government will only admit to a figure nearer 26% in a bid to contain economic pressures.

The new Brazilian government has increased duties on fuel and some imports to collect extra revenue to refill treasury coffers that are running low as the outgoing politicians left the legacy of a large budget deficit.

Expat pay

The firm also advises expats not to renegotiate their pay if the local currency exchange rate drops.

“Currencies always fluctuate, so rises and falls are expected,” said a spokesman. “Keep things simple by taking salaries in local currencies you can spend without worrying about exchange rates.

“Adjust for inflation, but otherwise take a view because a falling currency could be on the rise again by the time any pay review comes around.”

Expat employers are also warned not to compensate employees for making poor financial choices.

Below is a list of some related articles, guides and insights that you may find of interest.

Questions or Comments?

We love to get feedback from our readers. So, after reading this article, if you have any questions or want to make comments, send us a message on this site or our social media?