Russia’s crisis has no end in sight as $50 oil looms, says OECD

Saturday, December 27, 2014
By Paul Martin

Russia is moving towards autarky in the face of falling oil prices and tensions with the West that have left no end in sight for the country’s economic woes, says OECD chief economist

By Szu Ping Chan
27 Dec 2014

There is no end in sight for Russia’s economic crisis, as crippling sanctions and tumbling oil prices leave the country staring into an abyss, the Organisation for Economic Co-operation and Development has warned.

Catherine Mann, the OECD’s chief economist, said Russia was moving closer to shutting itself off from the rest of the world, while the West’s sanctions against Moscow over its annexation of Crimea in Ukraine had left no end in sight for the country’s woes.

“It’s very difficult to tell what will get Russia back on track,” she told The Sunday Telegraph. “The end game is autarky, and for an economy to return to being disconnected from the global economy, to be farming its own land for food, for the energy to be only used within its own economy, to not import clothing and machinery – this requires painful restructuring.”

Vladimir Putin, Russia’s president, has already admitted that sanctions against the country will lead to two years of economic hardship, and has forced cabinet ministers to work over the Orthodox Christmas holiday in January as policymakers grapple with the country’s crisis.

Ms Mann said it was difficult to see Russia emerging from crisis while tensions continued with Ukraine. “A better strategy would be the geo-political one, and there is a sense that president Putin would rather move in that direction. But from the perspective of the countries that have imposed sanctions there does not appear to be a loosening of their resolve, so from that standpoint I don’t see any changes.”

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