Russia’s Economy Set to Face Old Problems in New Year
After a swift recovery from the coronavirus recession, the Russian economy is facing a familiar set of challenges.
The Russian economy is set to revert to its pre-coronavirus pattern of sluggish growth, weak investment and underwhelming living standards in 2022, economists predict, as the Kremlin re-embraces austerity after the initial impact of the Covid-19 pandemic.
While other countries have used the pandemic to overhaul their economic policies, launch ambitious investment projects or accelerate the green transition, Russia’s approach has been to get back to business-as-usual as soon as possible, seeing the fallout from the coronavirus as vindication of its stability-over-growth model, and will now double down on its ultra-conservative policies.
That means strong government finances and more pulling back from the global economy, resulting in lower growth and continued pressure on households, economists say.
“The authorities learned that their policy has worked — as far as they’re concerned. The ‘Fortress Russia’ approach has served them well and they probably can pat themselves on the back for that,” said Elina Ribakova, deputy chief economist at the Institute of International Finance (IIF) in Washington, D.C.
“Now, they are very focused on the macroeconomic situation, stability and their conservative policies. In turn, they’ve somewhat given up on regional policies and the policies of providing better quality services to people,” she added.
A return to austerity is reflected most clearly by independent forecasters’ predictions for meagre economic growth in the coming years.
Source
The Russian economy is set to revert to its pre-coronavirus pattern of sluggish growth, weak investment and underwhelming living standards in 2022, economists predict, as the Kremlin re-embraces austerity after the initial impact of the Covid-19 pandemic.
While other countries have used the pandemic to overhaul their economic policies, launch ambitious investment projects or accelerate the green transition, Russia’s approach has been to get back to business-as-usual as soon as possible, seeing the fallout from the coronavirus as vindication of its stability-over-growth model, and will now double down on its ultra-conservative policies.
That means strong government finances and more pulling back from the global economy, resulting in lower growth and continued pressure on households, economists say.
“The authorities learned that their policy has worked — as far as they’re concerned. The ‘Fortress Russia’ approach has served them well and they probably can pat themselves on the back for that,” said Elina Ribakova, deputy chief economist at the Institute of International Finance (IIF) in Washington, D.C.
“Now, they are very focused on the macroeconomic situation, stability and their conservative policies. In turn, they’ve somewhat given up on regional policies and the policies of providing better quality services to people,” she added.
A return to austerity is reflected most clearly by independent forecasters’ predictions for meagre economic growth in the coming years.
Source