Financial and economic crises of recent decades and their impact on the Russian economy

This is a phenomenon of a market economy, repeating with a certain frequency, and depending on the scale, it can either concern a particular state or be of global importance. The problem that we will try to address in our work is determined by the fact that despite the creation by the world community of mechanisms to prevent economic crises (strengthening state regulation of economic processes.

The urgency of the problem is due to the fact that it is extremely difficult to find the best ways to minimize the impact of the crisis on the economy and the general situation in the country. The object of this educational study is crisis phenomena in the modern economy, and the subject is possible ways to minimize the consequences of the crisis.

In this paper, we hypothesize that the economic crisis cannot be prevented, but there are ways to mitigate its impact on the country’s economy. During the study, we will be able to compare the effectiveness of various anti-crisis measures and draw conclusions about how optimal existing

neologies are. Based on the above considerations, we determined the purpose of the study: to establish what anti-crisis measures could be most effective for the Russian economy in the current situation.  Compare the impact of several recent crises on the Russian economy, taking into account the anti-crisis measures being taken.

Financial and economic crisis in Russia in 1997-1998

Pre-crisis state of the economy and economic policy of the Government

It is no coincidence that we devoted the first chapter to the analysis of this crisis, as one of the most difficult in the history of Russia. It was its consequences that the Russian citizens most acutely felt, and the memories of it are still quite vivid in the memory of our parents.


By the mid-nineties of the twentieth century, Russia still could not recover from the consequences of the collapse of the Soviet Union and attempts to rebuild the socialist economic system. The goal was to form a fundamentally new society and state within the framework of the neoliberal model of the economy, with its inherent free market.

competition and a variety of forms of ownership [2]. However, the effectiveness, and most importantly, the success of such transformations, as a result, turned out to be in doubt, the reason for which was the limited measures of budgetary and monetary policy, expressed in the priority of counteracting inflationary processes over stimulating capital investments in the real sector of the economy; in increasing the tax burden in order to reduce the deficit of public finance.

as well as in accelerating external and domestic borrowing. In addition, the confiscation of the savings of the population in 1992 undermined the confidence of citizens in the newly emerged Russian state and the government of reformers. All subsequent actions of the Government of the country only aggravated the gap between the people and the new government. Government policy was as follows:

1. As the main anti-inflationary measure, a reduction in the money supply was used, including due to massive non-payment of wages and pensions, failure to fulfill obligations under state orders and to budget organizations.

2. Establishing an overvalued ruble exchange rate in order to reduce inflation.

3. Financing the state budget deficit by increasing the public debt.

4. Maintaining high tax rates to support state budget revenues.

Causes and consequences of the crisis

Most economists believe that the immediate causes of the crisis are: the government’s lack of funds to pay off debts; overestimation of the yield of GKO (Government short-term bonds) – OFZ (Federal Loan Bonds); macroeconomic policy of the “currency corridor” [1]. The impetus for the emergence of the crisis was also given by two external factors: the decline in world prices for goods of the fuel and energy complex (the main item of Russian export) and the crisis in Southeast Asia that broke out in mid-1997 [4].

The Russian economy chronically suffered from a budget deficit – it amounted to 5-8% of GDP.  Government short-term zero-coupon bonds were first issued by the Ministry of Finance of the Russian Federation in May 1993. In fact, the GKO market was a classic financial pyramid, in which almost all the country’s monetary resources were involved. For more than four years, money did not go beyond the financial sphere, speculation with these securities was more profitable than the release of the most profitable products.

Due to the artificial peg of the ruble to the dollar and the focus on the dynamics of the ruble exchange rate, the devaluation of the latter resulted in an explosive rise in prices.In the first half of 1998, the volume of industrial production decreased by 2.5%, agricultural production – by 3% [1].

The social consequences of the August 1998 crisis were manifested in the growth of inflationary processes, a decrease in the real content of the population’s income, and, consequently, in a sharp decrease in their purchasing power, an increase in socio-economic differentiation and an increase in the number of the poor.  For a significant part of the population employed in the financial sector and in trade, the decisions of August 17 resulted in job cuts and an increase in involuntary unemployment. In September 1998, 233 thousand people received the status of unemployed, and the total number of unemployed, determined according to the methodology of the ILO, reached 8.

A survey we conducted among residents of the Alekseevsky district showed that this crisis left the most vivid memories in their memory, since it most affected the level of individual well-being, in particular, deprived many of them of work.

Overcoming the crisis

The country quickly managed to get out of the debt hole in which it found itself and reach high rates of economic growth. A significant role in this growth was played by changes in the macroeconomic policy of the Russian authorities that occurred after the change in the composition of the Government and the leadership of the Central Bank.

Thus, from the 3rd quarter of 1998 to the 1st quarter of 2000, the amount of debt on salaries to public sector employees decreased by almost three times. This contributed to the normalization of the situation in the financial sector and the growth of confidence in the actions of the state.