Xinhua, Vienna :
The Austrian Institute of Economic Research (WIFO) yesterday claimed Russia is threatened with a new financial crisis.
WIFO said it expects the Russian economy to contract due to the crude oil price drop, while the devalued ruble is set for inflation, which would further losses on foreign currency debt and increase the burden on banks operating in Russia.
The weakened ruble will however mitigate the negative effects of the oil price drop on export revenues and the state budget. Overall though WIFO sees the Russian economy remaining clouded over the medium-term.
In the euro area the economy will be somewhat strengthened by the fall in oil prices, but a lack of demand and low prices will also dominate. The lack of methods to allow for appreciation and depreciation, particularly in the case of the relative undervaluation of Germany, are also a hindrance to growth prospects.
The European Commission investment package, the so-called “Juncker Package”, is also seen by the economic institute as being critical, particularly in guaranteeing private investment.
The United States has the best economic outlook, WIFO stated, with a debtor-friendly bankruptcy legislation ensuring a rapid reduction of private debt overhang following the financial crisis.
China is also expected to remain a primary driving force of global economic growth, it said.
The Austrian Institute of Economic Research (WIFO) yesterday claimed Russia is threatened with a new financial crisis.
WIFO said it expects the Russian economy to contract due to the crude oil price drop, while the devalued ruble is set for inflation, which would further losses on foreign currency debt and increase the burden on banks operating in Russia.
The weakened ruble will however mitigate the negative effects of the oil price drop on export revenues and the state budget. Overall though WIFO sees the Russian economy remaining clouded over the medium-term.
In the euro area the economy will be somewhat strengthened by the fall in oil prices, but a lack of demand and low prices will also dominate. The lack of methods to allow for appreciation and depreciation, particularly in the case of the relative undervaluation of Germany, are also a hindrance to growth prospects.
The European Commission investment package, the so-called “Juncker Package”, is also seen by the economic institute as being critical, particularly in guaranteeing private investment.
The United States has the best economic outlook, WIFO stated, with a debtor-friendly bankruptcy legislation ensuring a rapid reduction of private debt overhang following the financial crisis.
China is also expected to remain a primary driving force of global economic growth, it said.
