TAF PUBLISHING

The oil prices have been falling recently and reached the record low level. This paper assesses the impact of crude oil price movements on two macro variables, the Gross Domestic Product (GDP) growth rate, and consumer price index inflation rate, in Russia. Russia is selected for this analysis because it is one of the world’s largest oil exporters and oil revenue accounts for a significant portion of the country’s government budget. The main objective of this study is to see and compare the response of the two macro-variables of Russia during the high oil price era with the low oil price era. The results obtained suggest that the impact of crude oil price movements on Russia’s GDP growth rate in low oil prices era is much higher than in high oil price era. On the other hand, the impact of crude oil price movements on the consumer price index inflation was found to be milder in low oil price era. These results are obtained by examining the impact of oil price fluctuations on supply and demand side of the Russia`s economy.