RUSSIA: LOW-DEBT, CHINA-DEPENDENT AND SET FOR 2018 GROWTH


The Russian economy, after contracting by 2.5% in the wake of the 2015 oil price collapse, stabilized in 2016 and then grew 1.5% in 2017. With oil prices currently around $60 per barrel and Russia still benefitting from a competitively valued ruble, its economy appears headed for another year of growth in 2018.


 the Russian economy has one other sometimes overlooked source of strength that distinguishes it from most other economies: extremely low levels of debt (Figure 1).


The United States, Europe and China individually have total debt (public + private) to GDP ratios of close to 250%. India, South Africa and Brazil have total debt-to-GDP ratios in the 125-150% of GDP range. Russia, by contrast, has total debt of only 82% -- among the lowest of any country tracked by the Bank of International Settlements. High debt levels serve as a brake on economic growth and make a  That Russia lacks this constraint should be good news for the country going forward and explains to a large extent how Russia weathered the collapse in oil prices relatively well.


Figure 1:Russia Has Very Little Debt Compared to Fellow BRICs, The U.S. And Europe Total Debt (Public + Private) as a % of GDP


Source: Bank for International Settlements (BIS), http://www.bis.org/statistics/totcredit.htm


24 | ADMISI - The Ghost In The Machine | March/April 2018


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