A solid if unspectacular economic recovery
Overview:
The Russian economy is growing at a solid pace. The recovery is now broadening with domestic demand starting to grow, reducing the reliance on net exports. High oil prices ensure large current account surpluses, rising FX reserves and a stronger ruble. They also ensure a return to budget balance faster than had been anticipated. However, Russia continues to face significant medium-term problems despite the relatively positive near-term picture. Oil and gas production is stagnating and the economy remains massively over-dependent on this sector. While this problem has been identified, not least due to the severity of the recent recession, it is somewhat harder to resolve it. Rising hydrocarbon revenues, indeed, risk the problem being shelved especially with important elections on the horizon.