Russia's economy is now more dynamic and self-sustaining
Russia is back in black.
After two years of retraction, Russia recorded growth in two consecutive quarters — the textbook definition of when you can fill your Jacuzzi with black caviar and vodka and bask in the glory of economic recovery.
Russian economy grew 0.3% in last quarter of 2016 and again in the first quarter of 2017. Estimates are that total GDP growth in 2017 will be between 1.3 and 1.7 percent.
That is modest growth so far, but then contraction in 2016 was modest as well, below 1 percent.
Contraction in 2015 was substantial however at just under 4 percent so there is plenty to make up for before standard of living returns to the happy days of 2014.
Russia was plunged into recession in late 2014 during a perfect storm which simultaneously saw the collapse of oil prices, western financial sanctions, and loss of trade with western Europe and Ukraine due to sanctions and counter-sanctions.
During the crisis, Russia followed hawkish fiscal policies completely unlike those of Europe and the US after 2008. It jacked up interest rates (meaning no cheap loans from funds which aren't actually there) and cut spending, electing to conserve what healthy capital it still had rather than blow it on ill-conceived centrally-planned stimuli.
After a relatively brief two years Russia seems to have overcome its crisis.
Meanwhile, almost a decade after its reckoning, the west is still describing its condition as a "jobless recovery" — meaning a rising stock market for millionaires coupled with continued misery for the lower and middle classes.
This post first appeared on Russia Insider
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