re: Russia Unveils New Main Battle Tank, Among Other Things

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The Russian economy is in the shitter no way to deny it.

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At the end of 2014 the rouble was in freefall. By the beginning of 2015, it was worth a third less against the dollar than six months previously (see chart). Amid expectations of a deep recession in 2015, many economists thought things in Russia were going to get even worse. Ukraine, meanwhile, looked in danger of imminent default, with foreign-exchange reserves at dangerously low levels. The ongoing war had destroyed large parts of its economy, and it had not received any financial help from the West for months.


Since then, however, things seem to have got a lot better for Russia. In the last three months the rouble has appreciated by 30%. Government-bond prices have been steadily rising. On March 13th the Russian central bank cut interest rates to 14%, down from 17% in December. The Russian rally is partly down to investors’ mood swings. There is a feeling in the markets that the slump in the rouble went too far, says Timothy Ash of Standard Bank. After all, the optimists say, many parts of the Russia economy look pretty strong. The Russian current account will hit a $65 billion surplus this year. Foreign-exchange reserves, though they have fallen sharply over the past 12 months, are still very high.

Externally, things are also starting to look better for Russia. American and European sanctions on Russia are losing their bite. The European Union's ones, for instance, will expire at the end of July. At that point, sanctions will lapse unless there is a unanimous decision among the 28 member states to keep them going. With Russia courting Greece at the moment, unanimity is an impossible goal. And as oil prices have stopped tumbling, Russia’s economic footing looks a little more secure: oil-and-gas exports make up 70% of Russia’s annual exports and 52% of the federal budget. Russia’s real GDP is likely to contract by 3-5% in 2015, says Mr Ash, but the downturn is likely to be short-lived.

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