Friday, April 1, 2011

Bullish on Russian economy ---by Shan Saeed

Russia: Economy will solid direction--By Shan Saeed

Why I am bullish on Russia?

Russia defaulted on its domestic debt amounting to $60 Billion on 17th August 1998. Every analyst surmised that Russia was gone economically. But, Russia recovered and paid off the IMF debt in record time. Russia emerged as strong country. If I can share some statistics with you about Russia: The world biggest producer of crude oil is Russia per se and not Saudi Arabia as most people think.

[Source: Economist 24th Feb-2011 &]

Russia is the 6th largest economy with per capita standing at $10,521 in 2010. According to the IMF, Russia is set to grow its GDP by 4.34% in 2011. Russia and China have signed trade agreement to enhance volumes of economic corporation in Chinese Yuan and Russian Ruble. I am bullish on Russia for the next decade. In currencies, I stand bullish on Chinese Yuan, Canadian dollar and Aussie dollar and Russian Ruble. Russia is a resource rich economy and its currency ruble will appreciate against US dollar going forward. Oil and Gas are the main exports. With oil prices continue to upsurge; Russian economy will drive huge dividends in this favorable commodity price environment.

There are few experts that I follow and I have met them to get their insights about commodities and global economy. According to Marc Faber—the author of Gloom, Doom and Boom, Russian economy will continue to grow since it is rich in oil. He is bullish on oil. Oil prices upside will be high as global demand and appetite would grow further as emerging economies need energy for their sustainable growth and development. The country is moving with strong political forces that are joining hands to take the country to the next phase of economic development. Skilled and educated labor force and evolving business environment are making a strong case for foreign direct investment to be placed in Russia.
According to commodity guru, Jim Rogers, no major exploration has been done in energy sector for the past 25 years and energy economics follow a different path as we move forward to bridge the gap between demand and supply. Energy demand i.e. Oil and gas will remain high for many years. In 1998, the average oil price was $17/barrel. In 2008, the average price was $38.77 / barrel. In 2018, average prices are expected to touch $77/barrel. At present price, oil is consumed amounting to $3.2 trillion annually. In a nutshell, Russia will benefit from oil and gas price rise globally and will emerge as one of the strongest players in the international financial markets with solid infra-structure and sound economic base to navigate through the financial meltdowns and storms coming in the noisy market.

This is just a research piece and not an investment advice. Investors are encouraged to execute their own due diligence before making investment in any commodity, stocks, currency, bonds or country. All financial transactions carry a RISK.

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