The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss the state of the Russian economy under Vladimir Putin, five years after the first sanctions were imposed on Russia for the accession of Crimea to the Russian Federation.
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Russia’s economy has been a sore spot for more than two years now. Since the ruble crisis of late 2014 the role of the Bank of Russia has been to apply IMF-style counter-cyclical tightening to stabilize the situation in the wake of the decision to allow the ruble to float freely on the open market.
In a recent speech made to Congress last week, US Deputy Secretary of the Treasury Sigal Mandelker has confirmed that the US Treasury has frozen Russian-owned assets in the United States worth hundreds of millions of dollars as part of Washington’s sanctions campaign against Moscow since 2013.
“The actions of the US Treasury have had significant consequences for the financial interests of individuals and businesses that were affected, including the blocking of hundreds of millions of dollars of Russian assets in the United States.”
This article was first published by RussiaFeed
No subject in my experience causes more misunderstanding in discussions of economies – and of the Russian economy in particular – than capital outflow.
There seems to be a well-nigh universal belief that capital inflow is a “good” and that capital outflow is “bad”, and when the subject is Russia this is taken to an extreme.
A few weeks after the Russian Central Bank indicated that it was unlikely to cut its key rate before mid year, a cluster of good economic news have caused it to shave its key rate down today from 10% to 9.75%.
To be clear, this is a token cut that will not by itself make any difference to the state of economy. Its importance is that it clearly signals that more cuts are on the way. That may in itself act as a spur to growth, consolidating the recovery.
Rosstat, Russia’s state statistical agency, is reporting that the annualised inflation rate in Russia has now fallen to 4.5%, with Russia recording increasingly frequently weeks of zero inflation during the winter months.
This is most unusual. Normally the inflation rate rises in Russia in the winter and falls in the summer. The fact that Russia is now regularly recording weeks of zero inflation even in winter shows that inflation in Russia is falling faster than anyone (myself included) expected.
Russian Prime Minister Dmitry Medvedev has spoken optimistically today about the current state of the Russian economy, predicting stable growth for 2017.
He is right to do so. As previously reported, Russia exited recession midway through 2016, and its economy appears to have been growing steadily in the second half of the year, especially in the final quarter. GDP contraction in 2016 for the whole year is now put at just 0.2%, significantly better than forecast.
Britain’s The Banker magazine has named Russian Central Bank Chair Elvira Nabiullina Europe’s Central Banker of 2016.
The award is being linked to the Russian Central Bank’s success in bringing inflation in Russia down from 12.7% in 2015 to a post-Soviet low of below 6% in 2016 (the actual final figure will probably be 5.5% or 5.6%).
Global developments in finance and geopolitics are prompting a rethinking of the structure of banking and of the nature of money itself. Among other interesting news items: In Russia, vulnerability to Western sanctions has led to proposals for a banking system that is not only independent of the West but is based on different design […]
