RUSSIA is Broken

00:18:13
https://www.youtube.com/watch?v=kse-o0Oz2AI

Summary

TLDRThe video covers the ongoing economic turmoil in Russia, where record-high interest rates of 21% have failed to curb rising inflation, now at 10%. This situation is exacerbated by a massive increase in the fiscal deficit due to war expenditures, prompting concerns about the long-term viability of the Russian economy. Despite the ruble's recent strength against the dollar, there's little correlation with inflation trends, highlighting a disconnect in the economic picture. The harsh borrowing climate is stifling business growth, as companies struggle to manage rising costs and decreased profit margins, leading to broader economic strain.

Takeaways

  • 📉 Interest Rates at Record High: Russia's interest rates are 21%, the highest in history.
  • 🔺 Rising Inflation: Current inflation rate has reached 10%, worsening economic conditions.
  • 💰 Increased Fiscal Deficit: 14-fold increase in budget deficit due to war expenses.
  • 🏭 Business Impacts: High borrowing costs hinder business investment and expansion.
  • 🌍 Economic Comparison: Russia's inflation outpaces that of other G20 economies significantly.
  • 🥵 Ongoing Challenges: The economy continues to struggle with rising costs and labor shortages.
  • ⚖️ Currency Disconnect: Strength of the ruble does not relate to inflation trends.
  • 📈 Food Prices Rising: Food price inflation is notably high, affecting the poorest citizens.
  • 🛑 Urgent Need for Solutions: Russia's economy is at a critical juncture, needing immediate solutions.
  • 🤝 Possible Political Talks: The economic strain may drive necessity for resolutions in the Ukraine conflict.

Timeline

  • 00:00:00 - 00:05:00

    In the introduction, the host discusses the current state of the Russian economy, emphasizing the record-high interest rates of 21% and the persistent inflation problem. The traditional method of increasing interest rates to combat inflation is questioned, as past attempts have failed to resolve the increasing inflation. The host highlights Russia's escalating fiscal deficit due to increased spending, largely driven by the ongoing war in Ukraine, raising concerns about the economic strain.

  • 00:05:00 - 00:10:00

    The second segment focuses on inflation and food price increases in Russia. It provides statistical comparisons of Russia's inflation rates to other G20 economies, revealing that Russia's inflation rate of 99.9% is alarmingly high compared to countries like Brazil, the UK, and the USA. The discussion of food prices underscores the disproportionate impact on the poorest populations, as food prices have also surged significantly, stressing the economic challenges faced by ordinary citizens.

  • 00:10:00 - 00:18:13

    In the final part, the host summarizes the challenges facing the Russian economy, discussing the implications of high interest rates on businesses and investment. The current economic landscape is highlighted as precarious, with stagnant GDP growth attributed to high borrowing costs and rising operational expenses. The importance of addressing the ongoing war in Ukraine is underscored as essential for stabilizing the economy and preventing further inflation and interest rate hikes. Additionally, the host notes that despite the ruble's apparent strengthening, it does not reflect the underlying economic issues, emphasizing a disconnect between currency value and inflation.

Mind Map

Video Q&A

  • What is the current interest rate in Russia?

    The current interest rate in Russia is 21%, the highest in its history.

  • What is the current inflation rate in Russia?

    The inflation rate in Russia is currently at 10%.

  • How much has Russia's fiscal deficit increased recently?

    Russia's fiscal deficit increased 14 times in January 2025 compared to January 2024.

  • What challenges do Russian businesses face due to interest rates?

    Businesses face high borrowing costs, which discourages investment and expansion.

  • How does Russia's current economic situation compare with other G20 countries?

    Russia's inflation is the highest among G20 countries, significantly higher than the next highest country, Brazil at 4.56%.

View more video summaries

Get instant access to free YouTube video summaries powered by AI!
Subtitles
en
Auto Scroll:
  • 00:00:00
    hi welcome back to Joe blogs in today's
  • 00:00:02
    episode I want to talk to you about
  • 00:00:03
    what's happening in the Russian economy
  • 00:00:05
    because despite the fact that interest
  • 00:00:07
    rates are currently sitting at
  • 00:00:09
    21% which is the highest level in
  • 00:00:12
    Russia's history inflation is continuing
  • 00:00:14
    to rise and this represents a serious
  • 00:00:17
    problem from both the bank of Russia and
  • 00:00:19
    the Russian economy's perspective
  • 00:00:21
    because as I'm sure you'll be aware if
  • 00:00:22
    you follow the channel the traditional
  • 00:00:24
    way of dealing with Rising inflation to
  • 00:00:26
    try to stop it is to increase interest
  • 00:00:29
    rates but once you've got to a
  • 00:00:31
    record-breaking level once you're into
  • 00:00:33
    the 20s does that continue to work will
  • 00:00:36
    the bank of Russia just continue
  • 00:00:38
    increasing interest rates Forever Until
  • 00:00:40
    inflation comes down or will they try
  • 00:00:43
    something else and the problem that they
  • 00:00:44
    have is that they have actually tried
  • 00:00:47
    most things and it simply isn't curing
  • 00:00:49
    the problem with inflation now before we
  • 00:00:51
    get into the details of looking at
  • 00:00:52
    what's going on with inflation I thought
  • 00:00:54
    I'd pose a quick question to you my five
  • 00:00:57
    biggest audiences in order are the USA
  • 00:01:00
    the UK Canada Australia and Europe so
  • 00:01:04
    can you name what the highest rate of
  • 00:01:06
    interest was in the history of those
  • 00:01:08
    five economies I'll come on to give you
  • 00:01:10
    the answer later in the video and in
  • 00:01:12
    order to highlight the severity of the
  • 00:01:13
    problems in the Russian economy right
  • 00:01:15
    now it was recently announced that
  • 00:01:17
    Russia's fiscal deficit increased 14
  • 00:01:20
    times in January 25 compared with the
  • 00:01:24
    same period in 2024 the budget deficit
  • 00:01:27
    in January 24 was 124 4 billion rubles
  • 00:01:31
    however that has skyrocketed to 1.7
  • 00:01:34
    trillion rubles as a result of a 73%
  • 00:01:38
    increase in spending and that 1.7
  • 00:01:41
    trillion for the first month of 2025
  • 00:01:44
    compares to the full year budget deficit
  • 00:01:47
    of three trillion for the whole of 2024
  • 00:01:50
    so this really shows that Russia is
  • 00:01:52
    ramping up its spending right now and
  • 00:01:54
    the strain of the war in Ukraine is
  • 00:01:56
    really taking its toll on the Russian
  • 00:01:58
    economy and I think this is one of the
  • 00:02:00
    reasons why Russia is so open to having
  • 00:02:03
    talks with President Trump at the moment
  • 00:02:05
    to try to bring the war to a swift
  • 00:02:07
    conclusion because it is really breaking
  • 00:02:10
    the Russian economy so let's have a look
  • 00:02:12
    at what's going on with inflation right
  • 00:02:14
    now now just before we go on any further
  • 00:02:17
    today I want to talk to you about ground
  • 00:02:18
    news who I've been working with for the
  • 00:02:20
    past two and a half years and who I've
  • 00:02:22
    partnered with for today's video and
  • 00:02:24
    they're offering Joe blogs viewers an
  • 00:02:26
    exclusive 40% discount on their Vantage
  • 00:02:29
    plan which is what I use and what's
  • 00:02:31
    brilliant about ground news is that
  • 00:02:32
    they're a news aggregator they bring
  • 00:02:35
    together stories from all around the
  • 00:02:36
    world and if we look at Ground news
  • 00:02:38
    articles talking about Russian interest
  • 00:02:40
    rates hitting
  • 00:02:41
    21% you can see that they sourced 54
  • 00:02:45
    different articles and what's great
  • 00:02:47
    about ground news is that they tell you
  • 00:02:49
    whether those articles come from media
  • 00:02:51
    sources that lean to the left lean to
  • 00:02:53
    the right or come from the center which
  • 00:02:56
    is really important to me when I'm
  • 00:02:57
    trying to provide a balanced viewpoint
  • 00:02:59
    Point ground news are offering Joe blogs
  • 00:03:01
    viewers a 40% discount on the unlimited
  • 00:03:04
    Vantage plan which you can access by
  • 00:03:07
    scanning the QR code on the screen now
  • 00:03:09
    or clicking the link in the description
  • 00:03:11
    below this chart shows the movement in
  • 00:03:12
    the official rate of inflation in Russia
  • 00:03:14
    over the past 12 months one important
  • 00:03:16
    thing to note about this chart is that
  • 00:03:18
    the scale on the right hand side does
  • 00:03:20
    not start at zero it actually starts at
  • 00:03:24
    7.2% and Rises to
  • 00:03:26
    10.5% what this chart shows is that
  • 00:03:28
    between January and August 24 there was
  • 00:03:30
    a steady increase in inflation to
  • 00:03:33
    9.1% it then started to fall in
  • 00:03:36
    September and October and came down to a
  • 00:03:39
    low of
  • 00:03:40
    8.5% which was still more than double
  • 00:03:42
    the target rate of 4% however as you can
  • 00:03:45
    see over the past 3 months inflation has
  • 00:03:48
    started to take off again and the most
  • 00:03:50
    recent data for January 25 shows that
  • 00:03:53
    inflation is now sitting at
  • 00:03:56
    99.9% and if we widen the scale of this
  • 00:03:58
    chart to show what's been happening over
  • 00:03:59
    the past 3 years you can see that the
  • 00:04:01
    current rate of inflation is the highest
  • 00:04:03
    that Russia's experienced since February
  • 00:04:06
    23 and this table shows how the current
  • 00:04:08
    rate of 99.9% in Russia compares to the
  • 00:04:11
    rest of the G20 which are notionally the
  • 00:04:14
    20 largest economies in the world and
  • 00:04:16
    you can see that there are only two
  • 00:04:17
    economies where inflation is higher
  • 00:04:20
    Argentina where it's sitting at more
  • 00:04:22
    than 84% and turkey where it's above 42%
  • 00:04:26
    and if you follow the channel you'll
  • 00:04:27
    know that we've talked a lot about those
  • 00:04:29
    two economies iies they're both in a
  • 00:04:31
    state of economic crisis right now and
  • 00:04:33
    the next highest rate of inflation in
  • 00:04:34
    the G20 is Brazil at
  • 00:04:37
    4.56% so Russia is more than double the
  • 00:04:40
    next highest country and if we pick out
  • 00:04:42
    a few other selected countries you can
  • 00:04:44
    see that currently inflation in both the
  • 00:04:46
    UK and the USA is sitting at 3% it's
  • 00:04:49
    2.5% in the European Union 2.4% in
  • 00:04:53
    Australia 1.9% in Canada and
  • 00:04:57
    0.5% in China and this really puts into
  • 00:05:00
    perspective the problems going on in the
  • 00:05:02
    Russian economy right
  • 00:05:03
    now this chart shows the year-on-year
  • 00:05:05
    movement in food prices in Russia over
  • 00:05:08
    the past 12 months and this is a metric
  • 00:05:09
    that we always like to look at because
  • 00:05:11
    the poorest members of any society are
  • 00:05:13
    disproportionately impacted when food
  • 00:05:16
    prices are rising rapidly because
  • 00:05:18
    they're spending a higher percentage of
  • 00:05:19
    their budget on food and this chart
  • 00:05:22
    looks pretty similar to the chart that
  • 00:05:24
    we just looked at for inflation however
  • 00:05:26
    the actual levels are higher in January
  • 00:05:28
    24 food prices has increased year-
  • 00:05:30
    on-ear by
  • 00:05:31
    8.1% however by the summer of 24 that
  • 00:05:34
    had increased to
  • 00:05:36
    99.8% Russia experienced a Slowdown in
  • 00:05:39
    food price increases in August September
  • 00:05:41
    and October when the rate came down to
  • 00:05:43
    9% so still material however over the
  • 00:05:46
    past 3 months there has been another
  • 00:05:48
    jump in food price increases and the
  • 00:05:51
    most recent data for January 25 show
  • 00:05:54
    that year- on-year food prices have
  • 00:05:55
    risen by
  • 00:05:57
    11.1% and if we widen this scale of the
  • 00:06:00
    chart to show what's been happening over
  • 00:06:01
    the past 3 years you can see that the
  • 00:06:03
    current rate of food price increases is
  • 00:06:05
    the highest that Russia's experienced
  • 00:06:06
    since October 22 and this chart Compares
  • 00:06:09
    how those food price increases compared
  • 00:06:11
    to the rest of the G20 and as you can
  • 00:06:13
    see similar to the inflation chart
  • 00:06:15
    Russia is coming in at number three here
  • 00:06:17
    the only countries where food prices are
  • 00:06:19
    rising at a faster rate are Argentina
  • 00:06:22
    where they're increasing by almost 65%
  • 00:06:25
    and turkey where they're up around 42%
  • 00:06:28
    and the next highest in the G20 below
  • 00:06:30
    Russia is Brazil where food prices have
  • 00:06:33
    increased by
  • 00:06:34
    7.25% and once again if we pick out a
  • 00:06:36
    few other selected countries you can see
  • 00:06:38
    that food prices are currently rising by
  • 00:06:40
    3.3% in the UK 3% in Australia 2.5% in
  • 00:06:46
    the United States 1.6% in the European
  • 00:06:49
    Union 0.4% in China and interestingly in
  • 00:06:53
    Canada food prices year onye have
  • 00:06:56
    actually Fallen by 0.6%
  • 00:07:00
    this chart shows the movement in the
  • 00:07:01
    official rate of interest in Russia over
  • 00:07:03
    the past 5 years and as I said right at
  • 00:07:05
    the start of today's video the current
  • 00:07:07
    rate of interest in Russia of
  • 00:07:10
    21% is the highest in Russia's history
  • 00:07:13
    this tells us that there are severe
  • 00:07:15
    problems going on in Russia right now
  • 00:07:17
    because you don't have record-breaking
  • 00:07:20
    interest rates unless you've got severe
  • 00:07:22
    problems in your economy and to put the
  • 00:07:24
    current interest rate of 21% into
  • 00:07:26
    perspective and also to answer the
  • 00:07:28
    question that I posed at the beginning
  • 00:07:30
    of today's video the highest ever
  • 00:07:32
    interest rate recorded in Canada was
  • 00:07:36
    22.75% in
  • 00:07:37
    1981 in the USA it was 20% in 1980 in
  • 00:07:43
    Australia it was
  • 00:07:44
    17.5% in 1990 in the UK it was 177% in
  • 00:07:50
    1979 and in Europe it was
  • 00:07:53
    15.4% in 1981 so the only one of those
  • 00:07:56
    five countries that have ever had a
  • 00:07:58
    higher rate of interest than is
  • 00:07:59
    currently being experienced in Russia is
  • 00:08:02
    Canada for a brief period in 1981 and
  • 00:08:05
    congratulations to anybody that got any
  • 00:08:07
    of that data because that is quite a
  • 00:08:09
    hard question and in terms of how that
  • 00:08:11
    interest rate of 21% compares to the
  • 00:08:13
    rest of the G20 you can see that there
  • 00:08:15
    currently are only two economies that
  • 00:08:17
    have a higher rate of interest turkey
  • 00:08:20
    where it's sitting at 45% and Argentina
  • 00:08:23
    where it's 29% and the next highest
  • 00:08:26
    after Russia is Brazil Who currently
  • 00:08:28
    have an interest rate of
  • 00:08:31
    13.25% once again if we pick out a few
  • 00:08:33
    select economies you can see that the
  • 00:08:35
    current interest rate in both the UK and
  • 00:08:37
    the USA is
  • 00:08:39
    4.5% in Australia it's 4.1% in Canada
  • 00:08:43
    it's 3% in the Euro Zone it's 2.9% and
  • 00:08:47
    in Japan it's
  • 00:08:49
    0.5% which is obviously 42 times lower
  • 00:08:53
    than it is in Russia right
  • 00:08:55
    now now in terms of why High inflation
  • 00:08:57
    and high interest rates are bad for for
  • 00:08:59
    your economy let's talk about it in the
  • 00:09:01
    context of a Russian company let's say
  • 00:09:04
    you're a production business and you
  • 00:09:05
    want to increase your output you decide
  • 00:09:08
    that you need to add another production
  • 00:09:10
    line now if you don't have enough money
  • 00:09:11
    to be able to fund that yourself then
  • 00:09:13
    you would normally go to the bank and
  • 00:09:15
    borrow that money and you could do a
  • 00:09:17
    return on Capital calculation to say
  • 00:09:20
    okay I need to borrow a million Rubles
  • 00:09:22
    for example but within 2 years I'll get
  • 00:09:25
    a payback on that and I'll be earning a
  • 00:09:27
    lot of profit but the problem that
  • 00:09:28
    Russian business businesses have right
  • 00:09:30
    now is that if they want to take on that
  • 00:09:32
    debt they're going to have to pay 21% as
  • 00:09:36
    the base cost of borrowing plus a margin
  • 00:09:39
    so the Russian business might need to
  • 00:09:41
    pay 25 or 30% interest every single year
  • 00:09:46
    on the money that they're borrowing and
  • 00:09:47
    obviously that changes the calculation
  • 00:09:49
    hugely because nobody wants to pay 30%
  • 00:09:52
    interest on a loan it becomes very
  • 00:09:55
    difficult to make the numbers work but
  • 00:09:57
    in addition to that because we've got
  • 00:09:59
    RIS ing inflation at the moment in
  • 00:10:01
    Russia it means that if you're having to
  • 00:10:03
    take on more people and buy in more raw
  • 00:10:06
    materials to fund that new production
  • 00:10:08
    line it's going to cost you more than
  • 00:10:10
    you originally planned this chart which
  • 00:10:12
    is the latest data that's been published
  • 00:10:14
    by Russia and fortunately only goes up
  • 00:10:16
    to November 24 they've stopped
  • 00:10:18
    publishing this data so we can't give
  • 00:10:20
    you an up to the minute update but it
  • 00:10:22
    shows what's been happening over the
  • 00:10:23
    past 12 months with real wages and as
  • 00:10:26
    you can see in November 24 real wages
  • 00:10:29
    increased by
  • 00:10:31
    7.3% and the reason that that's
  • 00:10:33
    important is because real wages actually
  • 00:10:36
    take account of inflation so the
  • 00:10:39
    7.3% is on top of the inflation figure
  • 00:10:43
    in November 24 of 8.9% so that gives us
  • 00:10:47
    a real increase in wages of
  • 00:10:50
    16.2% and one of the reasons why wages
  • 00:10:53
    are increasing so rapidly at the moment
  • 00:10:55
    is because there's a shortage of Labor
  • 00:10:57
    this chart shows the unemployment ment
  • 00:10:59
    rate in Russia and as you can see the
  • 00:11:01
    latest data that's been published which
  • 00:11:03
    is for December 24 shows that the
  • 00:11:05
    unemployment rate is
  • 00:11:07
    2.3% and that compares with
  • 00:11:10
    6.4% back in August 2020 so what this
  • 00:11:14
    data is showing us is that Russian
  • 00:11:15
    businesses are being squeezed from both
  • 00:11:17
    sides they're seeing a rise in their
  • 00:11:20
    costs as a result of inflation so wages
  • 00:11:23
    are going up raw material prices are
  • 00:11:25
    going up but at the same time the cost
  • 00:11:28
    of borrowing is also at a record high so
  • 00:11:30
    Russian businesses don't really have
  • 00:11:32
    anywhere to turn if cost of borrowing
  • 00:11:34
    was low then theoretically they could
  • 00:11:37
    have actually taken on some debt to fund
  • 00:11:39
    the increase in the cost to get them
  • 00:11:40
    through this difficult period however
  • 00:11:42
    what they're seeing is the cost of
  • 00:11:44
    everything is going up and their profits
  • 00:11:46
    are going down and that's one of the
  • 00:11:48
    reasons why GDP isn't increasing at the
  • 00:11:51
    same sort of rate in Russia as you would
  • 00:11:53
    have expected given the fact that the
  • 00:11:55
    Kremlin is sponsoring lots of different
  • 00:11:57
    businesses that's why one of the reasons
  • 00:12:00
    why there is a labor shortage right now
  • 00:12:02
    because the companies that are receiving
  • 00:12:04
    the golden ticket from the state who are
  • 00:12:06
    being given guaranteed orders and
  • 00:12:07
    guaranteed revenue or paying top dollar
  • 00:12:10
    to bring in all of the people to achieve
  • 00:12:12
    maximum output that's pushing up wages
  • 00:12:15
    for all the other companies and they're
  • 00:12:17
    now really
  • 00:12:18
    struggling so what's the summary and
  • 00:12:20
    conclusion today well I wanted to post
  • 00:12:22
    this video because I think what's
  • 00:12:24
    happening with inflation and interest
  • 00:12:26
    rates really tell us that there are
  • 00:12:28
    serious problems continuing in the
  • 00:12:30
    Russian economy we've seen from the
  • 00:12:32
    January data that inflation is now
  • 00:12:34
    sitting at just under 10% and we've seen
  • 00:12:37
    a month-on-month rise over the past 3
  • 00:12:40
    months and that's despite the fact that
  • 00:12:42
    interest rates were set at 21% at the
  • 00:12:45
    end of October that's an all-time high
  • 00:12:48
    for Russia they've never been at that
  • 00:12:50
    level before and that in itself tells
  • 00:12:52
    you that the economy is in a really bad
  • 00:12:55
    situation as we talked about when we
  • 00:12:57
    compare this to what's happened in the
  • 00:12:59
    USA Canada the UK Australia and Europe
  • 00:13:03
    their record levels were set at a time
  • 00:13:05
    when the economy was in their deepest
  • 00:13:07
    recessions when they were really really
  • 00:13:09
    struggling and that's what's happening
  • 00:13:11
    in Russia right now and unfortunately
  • 00:13:13
    from the bank of Russia's point of view
  • 00:13:14
    they don't really have many other
  • 00:13:16
    options to go to because President Putin
  • 00:13:19
    has issued a strict directive that he
  • 00:13:22
    doesn't really want to see interest
  • 00:13:23
    rates going up anymore because obviously
  • 00:13:26
    it's hurting Russian companies as we
  • 00:13:28
    talked about if you're you're a Russian
  • 00:13:29
    business and you want to take on debt
  • 00:13:31
    right now that's the last thing that you
  • 00:13:33
    need for your balance sheet because
  • 00:13:35
    paying interest rates of 25 or 30% on
  • 00:13:39
    all of that debt is really going to put
  • 00:13:41
    you under a lot of financial strain it's
  • 00:13:43
    going to wipe out a lot of your cash
  • 00:13:44
    flow and really for many businesses it's
  • 00:13:47
    just not something they want to Embark
  • 00:13:49
    upon so that means that businesses
  • 00:13:51
    aren't investing they're not expanding
  • 00:13:53
    they're not looking to grow they don't
  • 00:13:55
    want to take on that debt and so over
  • 00:13:57
    the long term that's going to have a
  • 00:13:58
    really detrimental impact on Russian GDP
  • 00:14:02
    and I think what we're seeing in today's
  • 00:14:03
    video is that Russia is currently at the
  • 00:14:06
    edge it's at a precipice if it doesn't
  • 00:14:09
    increase interest rates further then
  • 00:14:11
    it's likely that inflation will continue
  • 00:14:13
    rising and I think one of the things
  • 00:14:15
    that's been raised a lot I've seen in
  • 00:14:17
    the comments over the past few months is
  • 00:14:19
    that the ruble has started strengthening
  • 00:14:21
    again and people are saying this shows
  • 00:14:23
    how well the Russian economy is doing
  • 00:14:25
    and as you can see from this chart which
  • 00:14:26
    shows the exchange rate between the US
  • 00:14:28
    dollar and the Russian r over the past
  • 00:14:29
    12 months there has been a significant
  • 00:14:32
    increase in the value of the ruble in
  • 00:14:35
    2025 at the end of 2014 one US doar was
  • 00:14:38
    trading for 114 rubles today it's
  • 00:14:42
    trading for 88 so at face value it does
  • 00:14:45
    look like the rubble has strengthened
  • 00:14:47
    significantly however there are a few
  • 00:14:49
    things to take into account here firstly
  • 00:14:51
    nobody's using the ruble anymore most of
  • 00:14:54
    the trading partners that Russia are
  • 00:14:56
    still dealing with have refused to deal
  • 00:14:58
    in Rubles it's two biggest trading
  • 00:15:00
    partners in terms of the oil sales China
  • 00:15:03
    and India have both said that they will
  • 00:15:05
    not deal in Rubles so China will only
  • 00:15:08
    deal in Chinese Yuan India wanted to
  • 00:15:10
    deal in Indian rupees however Russia
  • 00:15:13
    decided that it didn't want to get
  • 00:15:14
    involved in that and so the trade
  • 00:15:16
    between the two countries is now taking
  • 00:15:18
    place in a mixture of United Arab
  • 00:15:20
    Emirates durhams and Chinese Yuan so
  • 00:15:23
    neither of that is actually improving
  • 00:15:25
    the value of the ruble so what is going
  • 00:15:27
    on why has the ruble in increased in
  • 00:15:29
    value so much well the answer to that is
  • 00:15:32
    that it's now a very small Market there
  • 00:15:34
    are only a small number of countries
  • 00:15:36
    that are actually trading in Rubles and
  • 00:15:38
    what that means from Russia's point of
  • 00:15:40
    view is that it's able to manage the
  • 00:15:42
    exchange rate and improving the value of
  • 00:15:44
    the ruble on paper to around 88 to $1 us
  • 00:15:48
    means that theoretically the cost of the
  • 00:15:51
    Imports should be improving they
  • 00:15:53
    shouldn't be going up as rapidly as they
  • 00:15:55
    were when the value of the ruble was
  • 00:15:57
    falling so that should be improving
  • 00:16:00
    inflation but what we're seeing from the
  • 00:16:02
    data is that that isn't happening and
  • 00:16:04
    the reason for that is that a lot of the
  • 00:16:06
    Imports that Russia are buying in are
  • 00:16:08
    not being paid for in Rubles they're
  • 00:16:10
    having to pay for them in other
  • 00:16:11
    currencies and so the value of the ruble
  • 00:16:13
    is irrelevant in terms of what's
  • 00:16:15
    happening with inflation so we're seeing
  • 00:16:17
    a disconnect here between what's
  • 00:16:19
    happening with the currency and what's
  • 00:16:21
    happening with inflation normally you
  • 00:16:23
    would expect the two to move hand inand
  • 00:16:25
    if your economy is strengthening and
  • 00:16:26
    therefore your currency is strengthening
  • 00:16:28
    then you would expect inflation to be
  • 00:16:30
    calming down and vice versa but we're
  • 00:16:33
    seeing that there's no link currently
  • 00:16:35
    between the ruble and inflation that
  • 00:16:37
    really tells us that the ruble isn't
  • 00:16:39
    really relevant in terms of what's going
  • 00:16:41
    on with inflation and interest rates
  • 00:16:44
    right now so the overall summary of
  • 00:16:45
    today's video is that the Russian
  • 00:16:47
    economy is continuing to struggle
  • 00:16:49
    inflation is now Rising again interest
  • 00:16:52
    rates are at a record level the ruble
  • 00:16:54
    has improved in value but actually
  • 00:16:56
    that's not really having a very big
  • 00:16:58
    impact on on the overall economy itself
  • 00:17:01
    and Russia is now moving towards a
  • 00:17:02
    situation where it needs some sort of
  • 00:17:04
    deal for the war in Ukraine to put that
  • 00:17:07
    war to bed to be able to get its economy
  • 00:17:09
    somewhere back on track because if it
  • 00:17:11
    continues at the current rate we are
  • 00:17:13
    going to see inflation continuing to
  • 00:17:15
    Skyrocket interest rates may go up
  • 00:17:18
    further and all of that will have a
  • 00:17:19
    really detrimental impact on the
  • 00:17:21
    long-term growth for the Russian economy
  • 00:17:23
    so hopefully you've enjoyed today's
  • 00:17:25
    video you found it useful informative
  • 00:17:26
    and thought-provoking if you've liked
  • 00:17:29
    said then please give me a thumbs up
  • 00:17:30
    thank you for watching this video all
  • 00:17:32
    the way through to the end also thank
  • 00:17:33
    you to everybody that's bought me a
  • 00:17:35
    coffee or sent me a YouTube super thanks
  • 00:17:37
    or signed up as a patron or a member I
  • 00:17:40
    really really appreciate that support
  • 00:17:41
    really does help to keep me going so
  • 00:17:43
    thank you so much for that and here's
  • 00:17:45
    something to put a smile on your
  • 00:17:57
    face for
Tags
  • Russia
  • Economy
  • Inflation
  • Interest Rates
  • Fiscal Deficit
  • GDP
  • War
  • Ukraine
  • Ruble
  • G20