Tuesday, February 9, 2016

Interesting Seeking Alpha Article on Russia and Commodities

I have read a very interesting article on Seeking Alpha just recently in the morning. Here is the link. I agree with the opinion that low oil prices will not hurt Russia's economy in the long term as Russia is a very large country with bountiful amount of natural resources that cater towards their own socio-economic development. What's also going to be important towards the further development of their national economy will be their economic relationship with one of the most resource-hungry countries in the world (that being China). This will effectively lead towards the mitigation of the current ruble/currency crisis that has plagued Russia ever since oil prices took a nosedive. If this trend of the low prices continue, Russia will have to diversify its economy into building an economic base free of the "natural resource curse". Let's just put it this way: Russia will have to move away from its model of exporting natural resources (gas, oil, water, lumber) and towards exporting it's specialized products in military a lot more. While I agree with most of the points that the author in this article makes, I think it's more adequate to say that Russia faces troubles while their direct geopolitical and military competitor in the United States does not have similar issues.

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