Drop in oil prices underscores Russia’s vulnerabilities

The fall in oil prices over the past month poses another headwind for Russia’s struggling economy. The drop in prices is unlikely to have a major bearing on the outlook for the rest of this year – although it does limit the scope for fiscal stimulus to support growth. A bigger concern, however, would be if oil prices fall further from here and then stay low for a prolonged period. We think this is a realistic possibility and is a key reason why we expect growth to remain extremely weak over the coming years.