Even with falling oil prices, the Russian economy proved remarkably resilient in 2015, partly thanks to policies such as allowing the ruble to float freely.

A woman walks at an exchange office sign showing the currency exchange rates of the Russian ruble, U.S. dollar, and euro in Moscow, Russia, Tuesday, Dec. 29, 2015. The Russian ruble continued its decline on Tuesday, dropping by 0.6 percent to 72.6 rubles to the dollar. Photo: AP

The official economic results of 2015 will be tallied up by respective government agencies only in January 2016 after the New Year holidays.

However, even without meticulous calculations, it is clear that virtually all indicators will point to a fiasco: GDP is down by nearly 4 percent, the inflation rate is up 12.5-13.0 percent, and foreign trade dropped by 35-40 percent.

The ruble has been weakening, and now the dollar is worth about 70 rubles, and the euro is around 80, which is respectively 25 percent and 15 percent higher than the exchange rates at the beginning of the year. The most disturbing trend has been the 10 percent decrease in real wages and 5-6 percent drop in individual income.

Overall, these are clear indicators of a deep economic recession in Russia. Its causes are obvious, for they fully surfaced a year ago.

First, following geopolitical events in Ukraine, sanctions were effected on Russia, and since 40-50 percent of the Russian economy is dependent on raw materials exports, another damaging blow came from falling oil prices. Over the past 18 months, the price per barrel dropped almost threefold. 

Also read: "Is Russia ready to withstand low oil prices in 2016?"

Thus, when looking at the negative economic results of the past year, we can find only one reason to be optimistic. Before 2015, many expert economists predicted that the Russian economy would not be able to handle oil prices below $60 per barrel, then they changed the number to under $50 and finally to less than $40.

As we have observed, nothing terrible happened. The Russian economy survived and did not collapse even with the current $36-37 per barrel. It proved a lot more resilient than skeptics gave it credit for.

So what alleviated the consequences of the recession?

Two reasons why Russia’s economy did not collapse

It is necessary to consider two factors. First, Russia has sizable financial reserves that the government and the Central Bank of Russia accumulated during the "fat years," when oil prices increased every year and then lingered at $100 per barrel.

By the way, while these funds were being put away for a bad day, critics were actively demanding that the money be immediately invested into the economy. Financial agencies did not give in to the demands and were right: the country was not defenseless before the current crisis due to having the third largest financial reserves in the world.

Now that the bad days have come, the reserves are naturally being spent on supporting some sectors of the economy, infrastructure and budget needs. The Reserve Fund has lost almost $20 billion over the last year, but still, even after introducing anti-crisis measures, there is still $70 billion left in it.

According to Anton Siluanov, the Minister of Finance, Russia’s national reserves are currently running at about 11.3 percent of GDP. These funds, according to the Central Bank of Russia analysts, will let Russia maintain its budget spending until the middle of 2017-beginning of 2018 even if oil prices do not go up.

The second anti-crisis measure taken by the monetary authorities was the early introduction of the floating national currency rate at the end of 2014. Thus, the Bank of Russia de facto proposed a universal mechanism for adapting the economy to outside shocks. Ruble depreciation was now determined by the market, not the Bank of Russia.

The depreciation of the national currency helped the government delay some of the most catastrophic consequences of the oil price drop. According to Chris Weafer, a partner with Macro Advisory Moscow, currently every barrel of oil gives the government the same revenue (in rubles) as before, which helps the authorities keep the budget deficit in check.

Unemployment and capital outflow

Of course, the above-mentioned measures did not prevent the Russian economy from dropping, but clearly saved it from a catastrophe and a budget collapse. Moreover, some statistic results of 2015 upset experts' pessimistic forecasts.

To begin with, according to the International Labor Organization data, the unemployment rate remains relatively low for a recession at 5.5-5.8 percent. Compare Russia with the EU, which at the height of its crisis recorded a 4-5 times higher number.

Last year, some Russian manufacturers cut salaries, some reduced shifts and work hours, and others shifted employees to off-site labor, but in general Russia managed to avoid a spike in the unemployment rate and the civil unrest that would have followed a massive job loss.

Another telling indicator is capital outflow. As estimated by the Ministry of Finance and the Central Bank of Russia, net capital outflow over the course of the year is not likely to exceed the $60 billion mark.

This is a huge amount of money that points to difficult times for the economy, but it is important to put it into perspective: in 2014, Russia lost almost $100 billion more for a total of over $154 billion.

Also read: "Russia and the new geopolitics of oil"

Skeptics keep saying that all capital that wanted to leave Russia had already done so. But that is only part of the truth. Clearly, the capital that is ready to work in Russia under the current conditions is stabilizing, and that is good news.

What is next in 2016?

Given the circumstances, what can we expect in the coming year? Paradoxically, the authorities anticipate that economic growth will soon pick up. Both Alexey Ulyukaev, the Minister of Economic Development, and Maxim Oreshkin, Deputy Minister of Finance, agree that Russian economy hit  rock bottom in 2015, and it will rebound in the first months of 2016. 

Recent statistics from October and November, seasonal factors aside, indicates that GDP is growing steadily, albeit minimally. The economic and finance sectors of the Russian government are positive that this process will continue into 2016.

Independent experts are more skeptical. For example, Igor Nikolaev, the Director of the FBK Strategic Analysis Institute, does not believe that there are ways to stimulate the Russian economy directly, and the positive data from the last several months is determined by the low base effect, which can be observed, for example, when November 2015 is compared against November 2014, when the economy was sinking a lot deeper and faster.

For a full recovery, the economy needs investment, and attracting those during the recession and under global sanctions is challenging, to put it mildly. However, the situation is not desperate.

True, many sectors of the economy recorded fewer investments in 2015 ranging from minus 10 percent in agriculture to minus 30 percent in construction and power generation, but chemical production and the development of natural resources are seeing a 15-17 percent increase.

By the way, it is these sectors, along with the food processing industry, that received a good boost from the government's import substitution policies, which are exhibiting growth in 2015 on a year-over-year basis.

On top of that, Abel Aganbegyan, a full member of the Russian Academy of Sciences and a department head at the Russian Presidential Academy of National Economy and Public Administration, believes that Russia possesses a major internal investment resource.

"The main internal money pot is bank assets estimated at 775 billion rubles, which is commensurate with GDP," Aganbegyan claims. (Even at current exchange rates, that is more than $10 billion).

According to his calculations, only 1.5 percent of this enormous amount is being invested, while in developed countries (for example, in Italy) the number is around 20 percent. Even if Russian banks' investments reach 5 percent of their assets, it will help create the conditions for future economic growth.

Another expert, Ruslan Grinberg, an associate member of the Russian Academy of Sciences and the Director of the Institute for International Economic and Political Studies at the Russian Academy of Sciences, believes in state budget investments as opposed to the banking sector.

Recommended: "Russia could be the biggest casualty of falling oil prices"

"No economic recovery is possible unless the government invests into infrastructure, i.e. projects that facilitate regional development, such as the construction of high-speed railways, highways, and residential housing. It is important to focus on 10-12 top priority projects. Here is how it should work: the government initiates projects, starts funding them, and then makes them appealing to private investors," the expert says.

Finally, when making forecasts for 2016, it is impossible to stay away from discussing highly volatile oil prices. The more they drop now, the higher the probability of them rebounding.

At any rate, that is the forecast of organizations such as the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA), which independently stated that oil prices would be gradually increasing in 2016, and by 2020, would reach $80 per barrel. If the forecast comes true, it will definitely help the Russian economy.