The Russian economy (catch all)

[Firn]

In short budget cuts are necessary to avoid a situation like back in '98 were the budget and balance sheet were not strong enough to stop the financial meltdown. According to DW some of cuts have already happened without much ado. Needless to say that any budget cut in this situation will have a negative impact on demand and the economy as a whole, especially in a country like Russia were the public sector and de-facto SCE make up much more of it compared to your typical Western country...

There is no doubt that the Minister hopes that resources prices rally. Personally I guess that real prices will be higher in years to come, but every month this bear market lasts will inflict harm on the Russian budget and the Russian economy...

Resources have indeed moved considerably higher* and are a huge help to support the economic policies of the government on which a large proportion of the economy rests.

Skilled actions by smart folk in important positions have been key to quell the flames of a financial crisis by usually choosing usually quickly the lesser evil. Still the Russian economy suffered heavy blows over the last years and is clearly relatively weaker then four years ago. The overall long term economic trends are also overall negative and relative positive development to a very negative one on a year-to-year comparison is still overall - well - a relative negative one...

Firn

Maybe I will do a short update with some proper facts in the coming weeks.

*I guess that in a couple of years the price of oil will be lower again. However I don't short out of principle...