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By: Rolf Li

We have all heard about Russia. From the “Soviets” to “Russian Cancan Dancing”, we all know the country that has dominated the world business news–for the worse. After the Crimea annexation, you might have heard about sanctions and more political talk, but let me break it down for you. Back in July/August, where the majority of the conflict in Ukraine happened, Russia seemed very powerful. They were rumoured to be funding the Rebels, cyber attacking the West, and annexing a huge area of land–all at once. This was the perfect plan to create wealth from losing around 30 billion USD from the Sochi Olympic Games. At this point, Russia was in the position to make the choices they wanted to. But, the West interfered (as usual). The first round of sanctions from the West targeted individuals from the Kremlin, and from the higher ranks of the Russian Government. From there, we saw the incline of restricted goods banned within the country. To reinforce this idea, $17.8 billion USD was missing from the budget for the next year of 2015, and the economy shrank for about 2 months this November. In fact, when we average the growth for 2014, we are expecting the Russian economy to grow by about 0.02%. That is right. 0.02% from an expected 3% growth. For the upcoming year of 2015, the growth is expected to be only 1.1% assuming that the sanctions shrink, or remain equal. In the worst case, we are looking at a 0.5%-2% contraction of the economy. 3 months ago, Russia seemed powerful, but with the winter coming, and the price of oil falling like rain, the Russian economy is headed for a “powerful” drop. From a look at the other side of the story, EU exports to Russia have dipped by over 15% and over $1.1 billion USD in lost Pipeline contracts, and Russia has lost over $150 billion USD from low gas prices. Things don’t look so pretty for Russia, but there will always be a time when Russia does not screw up.

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