Russia
Business Cycle: Recession
Business Cycle: Recession
Russia's recession has been strangely not met with unemployment. While production is falling and exports are falling, there has been little change in the unemployment rate. Economists believe that this may be caused by the prevalent "shadow economy." Many people in Russia have stopped looking for work because they have joined the shadow economy. However, Russia has also outsourced much labor to workers from other countries. Some economists believe that these workers have born the cost of the Russian recession. Between 2014 and 2016, the number of work permits issued to foreigners dropped by over 1 million.
Therefore, it can be concluded in a period of recession. If commodities prices were to rise, or Russia was able to boost its manufacturing industries and diversify away from energy products, then they could see economic growth and a lower unemployment rate. However, if oil prices stay low and Russia cannot diversify its GDP away from commodities, then the current recession may extend into a depression because many of Russia's industries/sectors (including the service sector) rely on steady income from energy resources.
Ukraine
Business Cycle: Recession
Ukraine's unemployment has been steadily increasing as a result of political unrest and the ensuing reduction in manufacturing and exports. Because of constant political and economic turmoil, including the loss of Crimea, many firms have found it difficult to manufacture products. Also, Crimea was a key sea port for Ukraine making it difficult to export to key trading partners such as Turkey. The difficulty in manufacturing and trade has caused many firms to either reduce production or shut down leading toward higher unemployment rate. Many economists believe that without outside help from the ECB or IMF, Ukraine will remain in a recession and the unemployment rate may not fall in the short term. However, similar to Russia, the unemployment rate may be artificially deflated because of workers who have turned to the shadow economy and have given up looking for work.
Therefore, it can be concluded in a period of recession. If commodities prices were to rise, or Russia was able to boost its manufacturing industries and diversify away from energy products, then they could see economic growth and a lower unemployment rate. However, if oil prices stay low and Russia cannot diversify its GDP away from commodities, then the current recession may extend into a depression because many of Russia's industries/sectors (including the service sector) rely on steady income from energy resources.
Ukraine
Business Cycle: Recession
Ukraine's unemployment has been steadily increasing as a result of political unrest and the ensuing reduction in manufacturing and exports. Because of constant political and economic turmoil, including the loss of Crimea, many firms have found it difficult to manufacture products. Also, Crimea was a key sea port for Ukraine making it difficult to export to key trading partners such as Turkey. The difficulty in manufacturing and trade has caused many firms to either reduce production or shut down leading toward higher unemployment rate. Many economists believe that without outside help from the ECB or IMF, Ukraine will remain in a recession and the unemployment rate may not fall in the short term. However, similar to Russia, the unemployment rate may be artificially deflated because of workers who have turned to the shadow economy and have given up looking for work.
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