Russia's Economic Woes
Russian Economy in Deep Trouble

As everyone’s eyes are fixed on the Russian fighters zooming through the skies over Syria, things aren’t actually so glamorous back in the Motherland. Bloomberg has the story:

[Anatoly] Anisimov, 50, has put his plans on hold as he digs in for what could be Russia’s longest recession in almost two decades. “Nothing good awaits us next year either,” he says.

Across the Russian economy, businesses have shelved investment plans, worried that the ruble might extend its decline if oil prices slide further and that geopolitical tensions could bring new economic headwinds.

The prospect of a prolonged slump is a challenge for the Kremlin, which has relied on rising living standards to boost popular support, as well as foreign investors, who have bet billions on Russia as a growth market.

Russian President Vladimir Putin’s popularity for most of the past fifteen years has rested on comfortable economic growth. Yet due in part to low oil prices and Western sanctions over Ukraine, Russia’s share of global output is expected to shrink to its lowest level since the collapse of the Soviet Union by the end of next year.

So far, Putin’s nationalist rhetoric, his adventures in Ukraine, and his efforts to portray Russia as a force for stability in a world full of terrorists and weak-kneed Westerners have seemingly compensated for weak economic conditions. But while it isn’t prudent to confidently predict the political fortunes of a leader as durable and savvy as Putin, a less influential Russian economy will certainly have important effects on the Kremlin’s agenda. Russia will, for example, have to spend a larger percentage of its GDP on military and economic efforts to prop up leaders like Bashar al-Assad. It may not be coincidental that Russia is playing a bigger role in geopolitics amid tough economic conditions at home, but it is certainly a difficult act to pull off.

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