ASSESSMENTS

Slow and Steady Won't Win Russia's Economic Race

Aug 14, 2019 | 09:00 GMT

Russian ruble coins are seen in this photo illustration. Russia may be staring at poor economic growth down the road.

(DMITRY FEOKTISTOV/TASS via Getty Images)

Highlights

As a result of persistent Western sanctions and low global energy prices, Russia will continue its efforts to insulate its economy.
The Kremlin has implemented an economic strategy that will enable it to prevent a major crisis in the short term — even if the United States continues to ratchet up sanctions pressure — but economic growth will likely continue to stagnate for the foreseeable future.
In the longer term, such efforts will undermine Russia's economic growth, just as other downward pressures like demographic decline and migrant outflows will weigh more heavily on the Russian economy amid rising political uncertainty.

From the worldwide slowdown and the U.S.-China trade war to growing uncertainty over Brexit and a seven-month low for oil prices, the global economy is contending with its fair share of challenges. It's all of great concern to Russia, which is no stranger to economic worries, particularly since 2014 when the country faced twin economic shocks -- a crash in global energy prices and the West's implementation of sanctions following Moscow's intervention in Ukraine. The developments initially drove Russia into recession, as its gross domestic product contracted by more than 2.5 percent in 2015 before beginning a slow recovery in 2016. But since that time, U.S. sanctions have gradually expanded to cover everything from Ukraine to Russian political meddling in U.S. elections to Russian arms proliferation, affecting Russia's energy industry and finances, as well as hundreds of officials and oligarchs. In response, Moscow has worked diligently to blunt the effect of...

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