As Global Growth Stalls, The Russian Economy is Gathering Momentum — Jon Hellevig

There’s a lot going for the Russian economy as 2020 kicks into its second month. Russia’s government reshuffle is seen as removing austerity constraints and speeding up the financing of Putin’s ambitious national development programs. In his speech to the National Assembly, Putin signaled the end of austerity on social spending, Russia being the only country in the developed world, which is now seriously increasing social spending (among other things, increasing pensions double the rate of inflation and initiating massive child support programs) while everyone else is cutting. We expect that the Central Bank will have to follow suit and end its financial austerity in order to finally slash – Russia’s globally record high – real interest rates in line with the rapidly sinking inflation. Russia’s manufacturing industries will continue to grow above global averages fueled by the national development programs and on the strength of the now maturing import substitution programs. With new gas pipelines opened end of 2019 to China and Turkey, Russia’s energy exports will stay strong no matter what happens in the global economy. Because of the overall strong economy and the concurring huge reduction of influx of new young adults to the labor market due to the effects of the demographic crisis in the 1990’s, the labor market will be increasingly tight putting upwards pressure on wages, which will increase consumption....

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As Global Growth Stalls, The Russian Economy is Gathering Momentum
Jon Hellevig