Growth in Russia in Light of the Georgian War
Posted on Friday, September 26th, 2008 | In RussiaThe Russian press quickly labeled Tuesday Black Tuesday, which is a reference to the Tuesday back in October 1994 when the ruble lost a third of its value the dollar in one day. Although Russian stock market developments on September 16, 2008 were quite different, the connections to that day 14 years ago are inevitable for what the latest developments mean in terms of growth in Russia.
On this latest Black Tuesday, confidences over growth in Russia were dashed as stock markets fell drastically: the MICEX by 17.45% and the RTS by 11.47%. Because of such fever pitch selling, trading had to be suspended until the end of the working day, when on Wednesday, the declining market carried on and trading was suspended yet again.
The fall of the Russian stock market may affect growth in Russia in two ways
Not many Russians had invested their money in the stock market and so it is not likely that declining markets will directly affect most Russians. As such, the Russian stock market crisis from this perspective on economic growth in Russia will not be significant.
Russian stock market problems may create and investment crisis, affecting economic growth in Russia as a whole. After Black Tuesday many major companies bought back dumped stocks in an effort to maintain share prices. Such moves will mean less spending on developing new technologies or drilling new oil fields, which consequently, stands to effect these areas of growth in Russia.
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