NewsGlobal markets tumble: Russia's economic and military strain

Global markets tumble: Russia's economic and military strain

The Russians felt the crash on global exchanges, which occurred on Monday, 7 April, due to tariffs imposed by the U.S. President, Donald Trump. Not only did Russian company stocks suffer, but oil prices also dropped. Bloomberg indicates that this will impact Russia's military capabilities and limit the strength of attacks on Ukraine.

Russia has a problem. Its military funds have significantly decreased.
Russia has a problem. Its military funds have significantly decreased.
Images source: © PAP | VYACHESLAV PROKOFYEV / SPUTNIK / KREMLIN POOL / POOL
Marcin Lewicki

It is a bleak day on the world markets. Since the morning of 7 April, stock indices on exchanges worldwide have been plummeting. "Red Monday" affected, among others, companies in the United States, China, and also firms in the European Union, including Poland.

Russian companies also recorded a significant decline. The Moscow stock exchange was dominated by the colour red. However, this is not the only problem for Russia's economy. Along with the stock market declines, the price of Russian crude oil significantly fell.

Bloomberg reports that the price per barrel is around $50 (approximately £40 today). This is the lowest figure in two years and the lowest in 21 months. Such a sudden drop will have significant consequences for Russia's budget.

Will Russia have to limit attacks on Ukraine? It's an effect of falling oil prices

According to Bloomberg experts, the Kremlin will be backed into a corner. To balance budget spending, authorities in Moscow must cut military funding. This could mean that plans to increase funds allocated for the war with Ukraine might not materialise.

Experts point out that to balance the budget, a barrel of Russian oil should cost around $60 (approximately £48). This means that losses will be significant and difficult to patch.

The stock market crash and the fall in oil prices are the effects of the tariffs imposed by the administration of Donald Trump. The American politician imposed tariffs on products from, among others, China, Switzerland, and the European Union. Russia was not directly affected by the tariffs, but Trump's decision significantly impacted the local economy.

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