flamming_python wrote:miketheterrible wrote:GarryB wrote:What is with this reaction guys?
Is the article wrong?
I would expect considering the situation... ie Russia under sanctions from the west and in the middle of a pandemic that economic figures might show some effects... isn't that normal?
A 30% drop from crippling western sanctions and a national pandemic that force people to stay and home and not work is barely a scratch... I would take that as being rather good news... in comparison the US has lost more people than they lost during the Vietnam war over a period of about 6 months compared with a 10 year conflict... wonder what their real figures would be... does anyone actually work out their real figures with all the padding and BS removed?
Because the numbers don't add up
What numbers don't add up?
Russia's retail, tourism, transport, construction, hospitality & leisure industries combined are hardly insignificant, and they have all virtually been brought to a standstill by the virus and lockdown measures, restrictions on travel and so on. Some industries have been affected too (others will come later)
Add to that the oil price collapse. But then of course for the oil price to collapse, the demand has to collapse. And the collapse in demand correlates to a collapse in economic activity in every other country as well.
I would expect that most European country's economies would decrease by 20% in April at the bare minimum. For many it would be closer to 30%. For the carefree southern countries most reliant on tourism - 40%.miketheterrible wrote:Anyway, the so called drop doesn't make much sense tbh. Germany is reliant on small and medium companies, as well as services. If they were on total lockdown, then how did they face a much smaller drop than Russia while Russia still holds a surplus?
They didn't. Germany has only published the figures for Q1 AFAIK. Q1 doesn't include April.
Small and medium companies aren't necessarily the ones that get hit. Nor necessarily companies in the service industries.
It's mainly tourism, retail, airlines, airports, construction, hotels, fitness & health, bars/clubs/restaurants/cafes that get impacted; and by impacted I mean totally shut down. At least for April, knock-on effects and loss in trade, purchasing power, inflation, deflation, bank defaults, US dollar losing hegemony, etc... will in time affect everything.
Germany will probably escape with a 10-15% decline in April. They are no more reliant on what I mentioned than Russia is, and they are also not a major oil producer.
But it doesn't really matter because Germany will not save Monaco, Italy, San Marino, Spain, Portugal, Malta, Greece, Cyprus, Croatia, Bulgaria - with their incompetent economic models. All the lazy countries with too much sunshine. Germany will be dragged down with them, their empty beaches & hotels, their excess restaurants & cafes, their overstretched medical expenses, their debts, their expensive green energy attempts, and all their salaries to their numerous bureaucrats and state sector employees that they give work to avoid large unemployment figures.
France and Belgium will fare better, but are basically also in this group - too much exposure to retail, tourism, too many state workers, high debt and not solid enough economic fundamentals
Poland, the Baltics, Romania, the Ukraine will be lesser problems, but basically problems as well - due to their reliance on remittances from migrant workers and reliance on EU funds. This was already under threat due to Brexit and the loss of the British employment market and contributions to the EU budget. Now many of those migrants have taken a hike back home and aren't generating much money for their families, while the EU funds and projects will be cut cut cut!
Kosovo, Macedonia, Montenegro, Bosnia, Albania and the Ukraine, these extra-EU black holes that the EU constantly has to give money to. Especially the Ukraine, with all its constant IMF tranches just to prevent a detail due to interest payments on previous loans. They can't do anything with the Ukraine, they can't get rid of it either. Just more mouths to feed.
Which EU countries will do the best in 2020? Finland, Norway, Denmark.
Followed by Sweden, Germany, Holland, Luxembourg, Czech Republic.
Ireland, Austria, Hungary, Slovakia, Slovenia probably square in the middle between the best and worst performers.
If these countries were smart they'd ditch the deadweights or at least elevate themselves to their own club within a club with a common currency. But politics will probably prevent it and the EU will just continue on to its 5th or so crisis in a row, and keep at it until it eventually proves non-viable for good; we're probably still a crisis or two away from that but at the rate they're throwing themselves from one boiling pot to another it won't be too long.
Russia itself is probably between the Sweden/Germany and Ireland/Slovakia level, in terms of economic damage. But in practice better, due to its larger internal market, no EU funding commitments, big reserves and low debt.
So I tallied up the GDP Q1 and Q2 y-on-y results for European countries, and prepared a list from best performers to worst (Belarus I had to exclude as no Q2 figures from there yet):
kosovo (putting it in here as now even Serbia de-facto recognizes it apparently and PapaDragon approves)
Well my predictions were about half-right. Ireland has done much better than expected, Lithuania, Poland too; definitely a new commonwealth rising here which will be a pain in the ass just like Turkey (which also placed very high even though I excluded it from the European list). The UK has gotten nuked far more than I thought it would back then, France as well. Germany, Austria and the Czechs performed subpar. Serbia has performed wonderfully, Bosnia and Bulgaria didn't do so bad either - I guess there's strong investment and industrial growth in that part of the Balkans at the moment that I didn't account for. On the other hand Montenegro performed miserably, like the corrupt offshore 1-man oligarchy reliant on tourism, remittances and illegal money that it is. An opportunity for reunification with Serbia here.
Maidan Ukraine performed sluggishly as in everything, but still, I would have liked for it to have gotten knocked down some more. There's still time though.
And importantly, Russia also placed better than I expected. In fact 8th in Europe, and of the significant European economies - only Poland's and Norway's is above it. Everyone else has done worse than Russia; including the ones in its weight class - the UK, France and Germany.
Solid industrial and agricultural fundamentals in Russia offset the damage, along with a recovery of the oil price from April lows.
Go Serbia and Russia