Carnegie Moscow Center
Russia’s recovery remains slow. With domestic demand still weak, oil and natural gas producers—critical players in the Russian economy—are looking for markets outside of Russia.
Russia’s accession to the WTO—which would benefit both Russia and the global trading system—has been stalled since June. To move forward, Russia must clarify its accession plan and prove its commitment to the WTO.
Signs of strength are emerging in the Russian economy, aided by increasing exports, oil prices, and industrial production. However, weak domestic demand may hamper the recovery’s sustainability.
The economic crisis has devastated the Russian economy, where GDP is expected to contract by nearly 10 percent in 2009. Despite optimism among government experts, ballooning debt and plummeting revenues threaten the recovery effort.
Russia remains hobbled by an unfulfilled need to diversify its economy and to strengthen the independence of its economic and judicial systems. A global turnaround will not solve these problems.
The economic crisis has had a clear impact on the already impoverished countries of Central Asia, but few Americans and Europeans have noticed. China and Russia have stepped in to provide aid, and their investments threaten institutional reform in the region.
Russia’s response to the global economic crisis has focused on supporting corporations and the financial sector. The deepening social impact of the downturn suggests that leaders should concentrate on cushioning the blow to the poor and the vulnerable.