Pessimistic Outlook in Russia Slows Investment, and the Economy

Growth has slowed to well below the global average as economists point to low spending by the government and the private sector.

Comments: 26

  1. "900 hundred pianos for music schools"? Not such a bad dea. I wish we had more and higher quality pianos in our schools for our children.

  2. "bulging foreign currency reserves, tamed inflation and a budget surplus of 500 billion rubles," This might look impressive, but at the end of the day if Ivan and Olga doesn't see it on their pay check, improvement on infrastructure or social services - it will not matter. The infrastructure "system" is in such a deplorable state and blatantly corrupt that whatever money is spend is siphoned to the well connected cronies. Big streets are repaved and redone on the average every two years. Curbstones in polished granite adorn even the smallest obscure streets only to sink into the ground and be paved over again. Water trucks hosing and washing the streets day and night, twice when it is raining and snow trucks cruising back and forth when there is not a snowflake in sight. The service providers who "win" these contracts are the ones emptying the 11th richest country in the world.

  3. @Steen Doesn't sound so bad. I wish the streets in the US was redone every two years, because right now they are in horrible shape - like they were bombed constantly. I don't know what companies does our streets by the disintegrate very very quickly.Snow? Don't even mention - even half-inch brings the city to complete stop.

  4. One of the downsides of an autocracy is that the autocrat in charge can just decide to take your money or property, legally or not. That doesn't matter that much for most who don't have a lot of liquid assets, but is a major reason for wealthy people to move their money elsewhere. This uncertainty also repels foreign investment. So, absent much greater government spending and investment, this low growth rate is no surprise.

  5. Russia is too busy bombing hospitals in Syria and backing rogue regimes than to concentrate on its own people. Sad!

  6. Ah, Russian infrastructure! For the 2018 World Cup Russia built a soçcer stadium in a swamp in Kaliningrad, didn't put enough sand under the foundation due to corruption, and is now covering its eyes and pretending that the stadium isn't slowly sinking into the swamp. That's what I think of when I hear about Russian infrastructure. Perhaps they're better off after all by hoarding their money and settling for anemic growth.

  7. You can’t do business in Russia unless you grease palms and/or have friends in high places. That’s a lot of risk and unpredictability to grow an economy.

  8. I think pervasive corruption has more to do with the lack of investment than this article suggests.

  9. Population decline resumed this year, after a slight increase the year before - they are currently about 2 million below the peak population of 1992, and life expectancy remains low. It is hard for an economy to expand when the population is shrinking.

  10. Meanwhile, back in the good old USA we are spending money like drunken sailors, driving the country further into debt, all in a time of prosperity. What could go wrong? And low interest rates, the bane of savers, are so low, it makes the casino up in New York called Wall Street look like a great deal since both the house and the gamblers all seem to win....until they don't.

  11. Trump will negotiate a merger with Russia!

  12. The fiscal conservative in me really appreciates a country that runs surpluses and puts away a rainy day fund. So bravo to Russia for that! Governments in the west are far too eager to whip out the credit card for whatever they think will buy them the next election.

  13. @Scott McElroy While millions of Russians suffer from shortages of just about everything. Plenty of items on the shelves for those with the means to buy them (much different than old Soviet days), but the oligarchs control virtually everything... for their own personal wealth and gain. There is a reason that crime is so rampant in Russia.. there is not fairness or rule of law in their pseudo democracy.

  14. How can one write an article like this without mentioning that any private enterprise that is successful sooner or later attracts Putin and his henchman, the principals get jailed or killed and the business nationalized..... anybody must be insane to invest in Russia.....

  15. The only real reason there are any fiscal surpluses in Russia are three fold: 1) the oligarchs have pillaged so many billion already... there is little point in pillaging more. Putin alone is reported to be one of the wealthiest men in the world (all of it secreted from the Russian Public). 2) Heavy embargoes from other nations means that Russia is stitting on heaps of hard currencies, and no legal way to spend them, not even on behalf of it's people. 3) Russia spends very little on it's actual citizens. And what does get spent.... 90% is peeled off via side deals, over charges, and shoddy product or services. If this keeps up.. eventually there will be a second Russian civil war in the modern era... and that could bean disaster for the rest of the world... given the nation is a nuclear power and whoever gets the nukes determines the fate of the rest of the world.

  16. @Chuck They must spend something because according to human development index Russia ranked 49, higher than EU members Bulgaria and Romania who do not suffer from sanction. And did you notice the article is talking about educated population? Who do you think educate Russian population? Uncle Sam?

  17. It is ironic that the Russians have adopted what used to be solid Republican economic principles: budget surpluses for rainy days and conservative budget forecasts. Now they rank 11th in GDP while China is 2nd. Take away Russia's missiles and they would be as influential as Paraguay.

  18. Start a business in Russia. Build it successfully. Local tax guy comes and says you're short. Pay him off. Local mafia comes and says you need "protection". Pay them off. Local cops come and say you need protection from the local mafia. Pay them off. Local govt. says you lack certain "necessary" permits. Pay them off. Higher-up govt. official says he wants to be your "partner" to help grow your business. Give him a forced share or the tax man, mafia, or local cops show up again. Why start a business?

  19. Hey, even their kleptocracts take their cash out of Russia... Never know when they'll knock at 4 a.m..

  20. @Mike I am just wondering how come that the Russian stock market is second-best performing in the World?

  21. The American fascination with Russia baffles me. First, Russia is a mob-run failed state with an economy about the size of Florida. They don’t really manufacture anything anyone wants - caveat: perhaps some weapons are exported when the buyer can’t get western made and of course, there’s the oil. The Russian military is crumbling - ever heard of their one aircraft carrier, Admiral Kusnetsov ? When not in dry dock it always travels with tug boats. Did the Russians interfere with American elections and help to elect Trump ? - yes, but they overplayed their hand and now suffer more from sanctions for a struggling economy and frustrated middle class. And, how foolish to bet the house on an unpredictable moron like Trump. Perhaps some short term gains, but Putin & his kleptocracy have now been exposed for all the world to see. Bottom line - do you know anyone who wants to move to Russia ? No - and, any Russian that can get out already has & the rich have exported most of their money to the West. The real question is why does the a West tolerate an aggressive Russia at all - a complete and total Cuba style embargo would crush the regime within 2 years. I’ve been to Russia twice - at best a bureaucracy run amok with so much corruption embedded in the system - it will require another revolution of sorts to right the ship. Shut down Russian cyber warfare and they are another insignificant second world country.

  22. @Paul Smith I am not so sure about fascination, but obsession is for sure. I guess Americans could not forget how scared they were of the Soviet Union. That's why it is such big deal about few posts on the social media that is supposedly changed the course of the American Democracy. That's why the American newspapers are trying to present Russia in the worst possible light. Does Russia have problems? For sure, it does. Does it mean Russia is doomed? No way. They are doing OK. Could it be better? Sure it could, but it could be much worse - it could be back to 90s

  23. Considering growth of Germany (0.6%), France (0.3), Italy (0%), Britain (1.5%), 1.3% doesn't sound so gloomy. Everything is perspective.

  24. Rather than focusing on growth, the article should focus on the Russian people who have seen their earning power cut in half as the ruble lost 100% of it's value to the dollar in the last 5 years. Imagine your income buying half as much. The national savings plan is a good idea, but it does not put the money in the average person's wallet. Compare the average wages in Russia (about $774), which gets 60% of all it's earnings from oil to Saudi Arabia (about $4,400), which also gets most of it's income from the same. The political stagnation in Russia is squelching it's citizens ability to lead better lives. Instead of building Russia up, the Kremlin seems focused on trying to bring others down, including it's own people. What a waste of time, money and energy.

  25. There are two ways for ones economy to "grow faster than the world as a whole" Build a better economy or Interfere enough in other countries to disturb their economies and bring them down - hence giving Russia a relative faster growth. Doesn't take an economist to figure out which road Putin is taking.

  26. Russia, pessimistic? I'm shocked! Shocked I tell you!! Putin has gotten his wish, he is President for Life. He gets to preside over a country that slowly fitters away its greatness into to irrelevance then oblivion. Russia has not really mattered for some time, they are reduced to making mean spirited jabs around the outside of world events, because they are unable and unwilling to make a positive contribution. Such a shame, at one time giants walked their countryside.