Wednesday, August 09, 2006

Trade deficit by 2009?

Russia’s difference between import and export could turn negative by 2009, said some experts in the government today.

The following scenario is based on Urals oil barrel priced in the range of USD65-54 for the next three years.

The ruble is expected to be stable in the range of 26.7-27.1 per USD. This is positive; after all, the ruble was looking to be unstoppable in its oil-influenced ascend. Strong ruble is said to hurt exporters, making Russian goods uncompetitive in foreign markets.

The price paid for making the national currency even out could be trade deficit (import higher than export). This essentially means that consumers will pay money which comes from high oil prices for goods which are not made in Russia, thus hurting the national producers. Even now, import from nearby countries to satisfy consumer demand is rapidly rising, posting an increase of 38.7 percent this year.

The possible trade deficit scenario is surprising, considering the current trade surplus of some USD63 billion.

Many analysts have expressed their disbelief at the idea that Russia could experience trade deficit, with some citing the stabilization fund as the solution in case the prognosis does indeed happen.

It is certainly worrisome that the Ministry of Economic Development should so calmly indicate that Russian goods may be redundant in the next years with the country relying heavily upon imports in the time when oil prices may go up as well as down.

Gazeta, Rusecon

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