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Russia’s economy is struggling at the beginning of 2016. Prime Minister Dmitry Medvedev thinks the economy is looking better than it did one year ago. But he told a conference in January that Russia must prepare for the worst. Medvedev spoke in Moscow at the yearly Gaidar Forum on economics. He said 2015 was probably the most difficult year for Russia economically in the past 10 years. The level of economic activity shrank 3.8 percent last year. Two main reasons for this were the sharp drop in the price of oil and Western economic sanctions. Oil is Russia’s main export. Its price has dropped about 70 percent to $30 a barrel over the past 12 months. Western countries placed sanctions on Russia because of its 2014 takeover of Crimea. Russia also has continued its military support for rebels in eastern Ukraine. The western measures have cut off Russian banks from international credit. The value of the ruble has dropped from a high of 30 to the U.S. dollar to about 75. Inflation was a major concern for Russians last year. On average, prices increased at a rate of 15 percent in 2015. But, consumer food prices increased between 20 and 30 percent. High inflation has hurt Russia’s poor. The number of Russians below subsistence poverty rose to more than 20 million last year from 18 million a year earlier. Medvedev admitted the government would likely face budget cuts. About half of Russia’s budget depends on oil export revenues. Observers say oil prices could drop further to $20 a barrel.
