The Russian Collapse: Well, That Didn’t Take Long
28 February 2009On the evening of February 23rd I suggested here that the Russian economy was on the verge of collapse (see below). On the morning of the 25th, the front page of the FT came out with the story, based on figures released the night before, showing an 8.8% unexpected drop in GDP (join the club, as the U.S. revises downward for Q4 into the minus 6.6 range). But Russia is not like the U.S., as I pointed out, and I think faces much more difficulty than we do.
Other figures on the sudden change in Russian economic well-being are even more disturbing.
The story lead is:
Russia’s gross domestic product contracted by 8.8 per cent year-on-year in January, Russia’s economy minister said yesterday.
This was a sharply lower figure than many had expected, indicating that Russia’s economic downturn may be much deeper than previously thought.
The economy ministry predicts that GDP will contract by 2.2 per cent in 2009, but following the January drop, this forecast “is looking very optimistic”, said Chris Weafer, a strategist at Uralsib, the Moscow investment bank.
“If this is the darkness before the dawn, then today’s number confirms the darkness, while the dawn remains an aspiration.”
For the whole story, click here:
http://www.ft.com/cms/s/0/9427c0f0-02dd-11de-b58b-000077b07658.html?nclick_check=1
Sometimes these calls take a year to come to pass, and sometimes they just take days.
One Response to “The Russian Collapse: Well, That Didn’t Take Long”
March 1st, 2009 at 6:24 pm
Stuttering Tandemocracy
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The political regime crafted by Vladimir Putin faces its most daunting challenge.
The economic crisis is putting tremendous pressure on the Russian leadership. Under the political model crafted by Vladimir Putin, the state guaranteed steadily rising living standards, combined with an assertive foreign policy to restore national pride. In return, the Russian public would offer the leadership their trust and acquiescence.
http://www.tol.cz/look/TOL/article.tpl?IdLanguage=1&IdPublication=4&NrIssue=310&NrSection=2&NrArticle=20412