How and why lower oil prices matter for Russia’s economy

The fall in oil prices over the past month or so poses another headwind for Russia’s struggling economy. The drop in prices so far is unlikely to have a major bearing on the immediate outlook – although it does limit the scope for major fiscal stimulus to support growth. A bigger concern, however, would be if oil prices now stay low for a prolonged period. At best, the economy is likely to stagnate. At worst, it could face a crisis in as little as two years.