Russia Bans Grain Exports Amid Drought, Fires

Due to the worst drought in 50 years, Russia has banned grain exports for the rest of the year. As agriculture accounts for only a small share of the country’s GDP, the effect on economic growth should be minimal. However, if domestic grain prices rise significantly despite the ban, it could put upward pressure on food prices and the overall inflation rate. Russia’s economy is rebounding, but the … Due to the worst drought in 50 years, Russia has banned grain exports for the rest of the year. As agriculture accounts for only a small share of the country’s GDP, the effect on economic growth should be minimal. However, if domestic grain prices rise significantly despite the ban, it could put upward pressure on food prices and the overall inflation rate. Russia’s economy is rebounding, but the recovery is slow. Inflation is at historic lows, aiding real wage growth and consumer spending. However, should the drought linger or deepen, real wages and consumer spending could suffer, stifling the recovery. This situation is not to be taken lightly, as rising oil and food prices played an important role in bringing about the global economic downturn. Thank you for your interest in Wells Fargo’s Economic Commentary by email. You are receiving this message because you have requested Economic Commentary information and updates sent via email. If you no longer wish to receive these emails, please click on the following link to access the Economic Commentary by email registration page: http://www.wellsfargo.com/economicsemail.