RUSSIA (Russia is forecast to see negative GDP growth in the 3rd Q of 2023):
The Russian ruble fell to a 16-month low of 86.50 rubles to the US dollar a day after the recent failed military coup attempt by Russia’s mercenary army, the Wagner Group.
The recent attempted coup has added more challenges for Russia to solve. The cost of lives and resources must be of major concern to the average Russian. How long can this conflict can continue is the question. The US, European Union, UK, Canada, Japan, South Korea, and Australia have levied tough sanctions/penalties on Russia with possibly more to come as a result of their hostilities against Ukraine. Russia will have to deal with the severe sanctions that could cripple its economy and construction sector. Many US and European construction-related companies have moved their operations out of Russia.
Russia is a significant supplier/exporter of oil, natural gas, and metals. Elevated prices on essential materials, metals, and commodities, have triggered major price spikes around the world. Ukraine and Russia supply up to 35% of the world’s wheat and barley requirements. Countries in the Middle East and in Africa are major importers of these crops, and prices have risen by more than 40% with both Russia and Ukraine unable to export these products.
The Russian economy, prior to the commencement of hostilities in Ukraine, was slightly smaller in economic terms than Italy. Look for the Russian economy and construction sector to contract by at least 10% – 15% in 2023. Price hikes, inflation, and rising unemployment appear to be on the cards in the next 6 to 12 months.
Needless to say, the 2nd half of 2023 will be a challenging year for the Russian construction sector. The effect of the ongoing war with Ukraine on the construction sector has yet to be fully understood.
Unfortunately, the Russia-Ukraine crisis has impacted the global economy and the global construction sector. Look for this problem to continue until a peaceful solution can be found.