The Russian economy (catch all)

[Firn]

Two worthwhile updates by Mark Adomanis, including a neat chart:

Please note that all of the above concerns domestic, ruble-denominated debt. Foreign currency debt gets most of the attention in the press, there’s been a long series of articles about how the ruble’s collapse would lead to the bankruptcy and general ruin of the Russian corporate sector, but in absolute terms it is a relatively small part of the picture.

As of November 2015, even with the ruble’s nosedive past 70 per dollar, the total amount of delinquent foreign currency debt was about 17% the size of overdue ruble-denominated debt. That is to say that, by itself, the Russian construction sector now has more overdue loans than the overdue foreign currency debt of all Russian companies in all sectors. That, to put it mildly, is a problem.

A good update on the Russian construction sector

None of this means that “Russia is doomed” or that we’re on the precipice of a societal collapse. Housing is relatively modest as an overall share of Russian GDP, and “over-investment” in real estate has never approached the crazy scale seen in places like Spain or China. A housing bust would be painful, especially for developers, but it wouldn’t be fatal.

Nonetheless, housing was one of the few brights spots in the Russian economy. Continued high output in the construction sector helped prevent unemployment from heading even higher or the recession from being even deeper. During 2016, that is going to change.

Crude crashing below $30 per barrel, even if softened by the correlated ruble fall, is of course bad news for the Russian budget. I don't know where the oil price be in a couple of months or years but every month of such low prices hurts the Russian economy badly.