Advertisement

'Putinomics' and the Russian elections

'Putinomics' and the Russian elections
From Al Jazeera - March 17, 2018

President Vladimir Putin is on track to become Russia's longest-serving leader since Joseph Stalin.

As Putin seeks re-election in the upcoming vote, what is the state of Russia's economy? Andhow will ordinary Russians fare if Putin stays in power?

There's been a rise in living standards over Putin's 18 years in office, and despite Western sanctions and volatile oil prices, Russia's economy is still growing.

Timothy Ash, a senior emerging marketsstrategist at Bluebay Asset Management, says the last couple of years have been difficult but "it (Putin's economic policies) has worked in some respects; it's created financial stable exchange rates, inflation has dropped. The problem is ... growth has been very weak and disappointing."

"Fiscal and monetary policies have been too tight and too aggressive because of concerns about the geopolitical challenges facing Russia. Putin's also held back from structural reforms - the Russian economy is in dire need of deep structural reforms - things like business environment, fighting corruption, demographic issues, so these things have not been addressed. It's been a cautious micro and macro [economic] policy," says Ash.

Ash says the real question is "whether or not Putin is interested in a more ambitious economic reform agenda ... Russia is still an oil economy, and beyond agriculture, not much focus has brought diversification or investments. In the end, Russia is still struggling in terms of attracting foreign direct investments and that relates to the idea of the business environment: property rights, rule of law, the geopolitical relationship with the West. And if you are a big motor manufacturing company, do you feel secure building physical assets in Russia at the moment when the relationship with the US and Europe is so difficult? Probably not."

While Putin has improved the living standards of ordinary Russians, "the last three to four years have been difficult because stagnation has been the order of the day," says Ash. "While Putin himself is popular ... if you look at ordinary Russians, they are not very happy because stagnation does not go down very well. There is job security, but living standards have taken a fairly significant hit and a lot of young liberal Russians are leaving ... Russia needs those kinds of people to bring up productivity improvements and raise that growth potential of the Russian economy."

Advertisement

Continue reading at Al Jazeera »