Russia Still Far From Economic Recovery

GDP growth political cartoon.  Source: moscowtimes.ruAs the global economy shows positive signs of recovery, Russia continues to lag behind. Experts attribute the stagnation to dependence on natural resource prices and uncertainty about debts held by Russian companies. Chris Weafer, chief strategist at UralSib Capital, outlines the pessimistic outlook in the Moscow Times:

…but there are many serious problems still to be resolved and the seedlings of recovery will have to be extended to the consumer and small businesses if sustained recovery is to be achieved. The July data shows that the financial well-being of these important economic segments is still deteriorating. In absolute terms, the 9.3 percent year-on-year decline in GDP and the 10.8 percent drop in industrial output places Russia firmly at the bottom of the performance table of all major economies.

The risk of a second crisis wave has by no means been eliminated, although few expect the next challenges to cause the same level of destruction that we saw in late 2008 and earlier this year. But dealing with the still-unclear scale of bad debts in the banking system and restarting credit markets, at an affordable cost, as well as restoring consumer and investment confidence, are critical if the economy is to catch up with the positive trend in most major economies, which are now either seeing broadly based growth or are on the brink of it…

Too Early to Break Out the Champagne