The combination of strong rubles and high oil prices will temporarily curb inflation but could also accelerate future consumer prices, the Russian business daily RBC quoted Economic Dr. Denis Domashchenko as saying.
Russian economic experts warn that the dominance of energy revenue along with the strong Russian ruble could lead to the so-called " Dutch disease".
In economics, the "Netherlands disease" is a causative relationship between economic growth in a specific field and decline in other fields.
This status could be formed as negative consequences arising from a country's sudden increase in currency value due to the growth rate of commodity exports of an industry dominating, usually fossil fuels.
Initially, foreign currency flows in reduce domestic inflation, but at the same time they also slow down the development of other sectors, hinder economic growth, and lead to price increases.
The term "Netherlands disease" was first used by The Economist in 1977 to describe the decline in the Dutch manufacturing sector after the discovery of the large Groningen gas field in 1959.
According to Dr. Domashchenko, the recent strengthening of the Russian currency and increased revenue from Russian energy products are risks to the development of the country's economy in the long term.
The Russian economist warned that the "Netherlands disease" or the Groningen effect could clearly manifest itself in the Russian economy, high exchange rates could cause a backlog in the high-tech sector and lead to slow price increases.
Establishing a fixed ruble exchange rate instead of a floating exchange rate that has been in operation in Russia since 2014 will help create a balance between inflation regulation and economic growth, according to economist Domaschenko. He also said that a similar mechanism has previously helped stabilize the economic situation in China.
On May 23, the Russian ruble rose more than 6% against the euro to 58.75, reaching its strongest level since June 2015. Compared to the US dollar, the Russian currency increased 4.6% to trade at 57.47, near a four-year high recorded on May 20.
