Russia has inflicted a double penalty by letting Saudi Arabia declare the oil war. Added to the impact of the coronavirus epidemic, the fall in crude prices will plunge the economy into the red, warned the Russian central bank on Friday. The monetary institution expects a drop of at least 4%, even 6%, of GDP in 2020.
The epidemic "mainly threatens human life and health" but it has an "equally dangerous" impact on the economy, President Vladimir Putin said on Thursday.
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The containment measures taken since March 28 have put a stop to economic activity. Russia, very dependent on its crude exports, is also very affected by the unprecedented crisis in the oil market. Brent crude, which traded around $ 22 a barrel on Friday, has lost nearly 70% since early January. The barrel of WTI, the other major international benchmark, has temporarily gone into negative territory at the start of the week.
Russian exports are expected to collapse in 2020. They will not exceed $ 250 billion, compared to $ 419 billion in 2019.According to the central bank, the average price of a barrel of “Urals” oil, the country's key resource, should be $ 27 this year, far less than the $ 55 previously forecast. It is expected to recover to $ 35 in 2021 and to $ 45 in 2022.
Oil caused the ruble to fall. The Russian currency has now stabilized, at around 74 rubles for 1 dollar and 80 rubles for 1 euro, in particular thanks to the significant sales of foreign currency made for several weeks by the central bank.
But Russian exports should collapse in 2020. They will not exceed 250 billion dollars when they amounted to 419 billion in 2019 and Moscow, the institution predicts, will graze the trade deficit.