Guest post: despite gas deal, Russia’s economy is wilting – beyondbrics - Blogs - FT.com:
"Russia may have completed decade-long negotiations to sell gas to China in a deal worth US$400 bn over the next 30 years, but the agreement barely begins to paper over the all-too-obvious cracks in Russia’s weakening economy. Moscow’s stock market reacted positively to the deal, but it is down 4.8% year-to-date. Elsewhere, all other indicators of economic prosperity in Russia have decreased since the start of 2014.
Russia is more dependent on the global economy than it ever has been. And it seeks even greater dependency – as President Putin made clear in his opening remarks to the St Petersburg International Economic Forum earlier today. On the one hand, dependency brings with it obvious benefits. On the other, it leaves a country much more open to the vagaries of investor sentiments and perceptions of political risks as well as expected economic returns.
Some analysts (including me) argued that if Russia was going to “pay a price” for destabilising Ukraine then – while US and EU sanctions were important – it was likely to happen through a natural market reaction. And so it has proven."
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