Russia’s Incredible Shrinking Economy

please, let it be so

I hope things turn out in Russia. They are a great country, and a bulwark for the west. Bk, go back to worshiping John McCain.

To the previous commenter, go to hell for wishing misery on others.

The problem with predicting Russia's economy is that it's based on the price of oil, which is tied to many external factors of supply and demand. Even if Russia's growth over the past 5 years has been fueled by bubblish spike in the oil price, it does not mean that the Russian economy will shrink that much, as the economy only recently reached pre-1991 levels. This is different from, for example, the United States, where real wages have not grown since 1973 and economic growth has instead been fueled by a consumption boom propped up by cheap and widespread access to credit.

Also, Russia's fortunes are tied to the West - once the West recovers, demand for oil increases, and Russia is booming once again. So as for the previous presumably American commenter, you must pay for Russia's misery with your own!

in the end Russia will have no choice but to integrate into the world's financial system even more. They must be a nation of laws and not thugs. Liberalizing their rules further will help bring Foreign Direct Investment. Interestingly enough i heard that Gorbi has formed a new political party in Russia. I wonder if the west has started to pull the rug from underneath Putin's feet. I say he is toast.

Typical Ruskie BS. The thugs (government) are thieves. The poor there suffer as usual--and they always will. See what Lenin did?

As far as Russia being a nation of thugs, remember that it was us and not Russia that invaded Iraq and killed or tortured tens of thousands. As a matter of fact we may still be torturing people as I am writing this. R U Ok with that, Tareen?

The U.S is a criminal nation which has been practicing criminalism for two centuries. Criminalism now backfires on its society. Wall Street is a crime scene, the place the criminal nation harboring international financial criminals for its selfish interests, just like the bloody shark water. U.K. which is the criminal nation's lapdog crime partner is now sharing the same fate.

It's interesting when one's hatred of America deludes them into thinking that today's version of Russia, the Putin/KGB Kleptocracy, is indeed a great country!

Great potential indeed, a shame to see its people suffer through the misdeeds of the KGB Alumni Club!

Wishfull thinking!!! Russia has nowhere near the problems of the west and usa.
No debt no immigrants running wild.A white Christian Superpower. Putin and Medvedev are the two greatest leaders
no nonsence connservative in the world today. The liberal anti christian views are destroying the West. By the way congrats to Miss Russia no miss World

The current hysteria of Schadenfreude reflects prejudices and ignorance about Russia. Her prospects are much better than US and UK. Russia has current account and budget surplus unlike US and UK.
Russian central bank is not printing money like FED. Short term borrowing may cause short tem suffering but after 2 years i would go long on Russia and short US and UK.

One of the greatest issues in the Russian economy, is to rely so highly on oil, and in raw materials.
There have been a lot of money in goverment coffers yet a lack of interest to develope a modern service economy with a backbone at key industrial sectors, like electronics, consumer goods, cars, aerospace and biotecnology, in this sectors there are barriers to develope, promote R&D and boost jobs across the board in the country.
a significant lack of interest until recently the goverment raised the money to tecnological fields, still private money and good managment it's required to creat world class, competitive companies.
Banking sector it's opaque, osbcure and fragile, corruption in Russia remains in the private sector, and hinders the capacity of creating competitive forces inside the companies.
Russia it's great and do like and admire them, yet many things are still needed to turn the country in to a comprehensive powerhouse, all the great powers have powerful domestic economies and companies in several fields, mostly in newer areas and most knowledge.
Russia and other emerging powers are struggling to create great companies with a worldwide footprint.
Promoting entrepreneurship and turning those oligarchs in to a way to finance or create interesting conglomerates and modern manufacturing industries, could be a good way to splash the created wealth of oil and managerial skills across several sectors, cutting up reliance on imports, and developing native tecnologies and innovations to export, in the way giving less weight on oil and the swings of it's price.

yeah, Putin has been desparately needing an attitude adjustment for years

Russia, Putin, not so cockie anymore! he he he. Nation of thieves and criminals!

For all the previous commenters
i want to say that Russia isn't any more
a communist country,but a christian one.
So lets pray for more peace and love between christian countries, because Jesus last recommendation for us was to be one like him and his Father are one

to Kolkhoznik,

All countries, developing or develped are tied to supply and demand, the main income for russia has been continuoulsy commodities, the government has not invested in infrastructures around the country, except in certain areas between Moscow and St Peterburg. Whatever you may say, Mr Tareen is mostly right. I have worked in Russia since 1999 and I have done business there in different areas. I know how Russians do business, and the term thugs is not excessive. Russian needs the rule of law.Otherwise, investment will much reduced and Russia needs foreign investment

Having lived in both Russia and United States and also experiencing communism and democracy. All i have to say is that Russia is still controlled by the same communists that were controlling the soviet union for 60 years. Nothing has changed. The entire russian economy is based on raw resources, not only oil, but most raw resources have tanked in the recent months, causing severe problems in the russian economy. On top of that Russia has one of the most corrupt governments in the civilized world and unfortunately to say there is no real progress towards democracy there with all types of information controlled by the govt.

In the United States even though there is a lot of corruption in the govt, it is not on the same scale and most of the times once something is uncovered measures are taken to prevent it from happening again. United States is not controlled by few people like it is in Russia, but is controlled by a huge amount of people and one person doesn't make vital decisions. United States has an extremely advanced financial free system which will correct itself due to its free flowing nature. In Russia that will not happen because there is no real financial base.

Another thing to point out Russia has a huge population problem where 95% of population is extremely poor. The middle class pretty much doesn't exist in Russia. Its the ultra rich and the poor. Russian population has no real buying power since majority of people do not have viable jobs. United States on the other hand even though with an 7% unemployment rate has a huge social welfare system where people still get some kind of financial help. Russia has no social welfare programs. So if you are poor, you are poor. At least in US they try to help those people.

Another thing to point out. With recent Wall St wows and criminality the US financial system has been shaken to its core but there is another huge financial base in US that can keep the country afloat. United States never experience a huge devaluation of money like they have in Russia in the last 20 years.

So to summarize I think that nothing will change for an ordinary russian as far as their wealth status is concerned in the long term since most of them already don't have much, and US will eventually correct itself and recover. Unfortunately for the entire world everything depends on this one Superpower. So once US starts to pick up so will everyone else in the world.

Yury, that's an interesting rant, but you can't be serious!

it is really interesting to see how two Russians - Yuri
And Kokolzonik are reacting to facts. Their Post Soviet
Mind who seems to be sensible to Putin's'propaganda
machine couldn't even believe it! I advice to read the
great book of a Russian economist Yegor Gaidar "Collapse
Of an Empire" and they will understand in which desaster
is bringing this criminal leader Of this KGB Inc state!

YURI you sir are a typical Russian fool! Do you work for the Kremlin propaganda spin machine!

The only criminal nation for two centuries plus is R U S S I A!

I see how your people work for an average of $200-$400 a month US and then are forced to try and live on that, while your oligarchs or former corrupt Soviet Communist big bosses and their comrades steal the country blind and rip off the poor working masses of people there! How come I see pensioners walking around in the streets begging for food and money all the time!

Russia is nothing more than a run down slum state! The ruling elite under Putin have stole it blind and do not care at all about democracy or the people, it is all about KGB thug assassins, former communist big bosses stealing people blind, destroying any opposition or any rule of democratic law, and the total dismantling of any and all open and free elections. There is no more free press or free speech, no freedoms, no honesty, Russia is a sham.

A house of cards that is going to fall down fast, and you want to know why, because they are a dictatorship depending on oil prices and now you are all going to pay the price and suffer dearly for it. Hope you enjoy eating and drinking all that oil since there is so much demand for it now. I see today it is $36 a barrel now and heading lower.

There needs to be a major revolution by the entire people of Russia and overthrow that dictatorship thug regime there now, it is disgusting what I see each year when I have to visit Russia, just disgusting. It is just like it was under Soviet communism - big bosses at the top ripping off the masses and ruining a country in the process!

I went to school in the UK during the late seventies and met a lot of Russians. The average Russian and the average American are not very different. And we all suffer ill the effects lousy politics and bad administrations. But people shouldn't be so quick to wish the Russian people ill.

Not as close as we are to the same fate

Besides the demagogic rhetoric, I would like to add the following.

Russia has relied on natural resources for far too long. We are constantly reminded that both the buyer and the seller are held hostage to natural resources, in this case oil. Russia must diversify its economy away from natural resources – though they will certainly continue to play an important role – and move towards high-end, high value-added products. For example, Russia has a fledgling nanotechnology and biotechnology industry. More investment in these industries, as well as other high-technology, advanced science programs, would lead to a far healthier economy.

The establishment of a stabilization fund was a smart idea, but it has not been used for the most efficient programs. Instead of supporting spending – as the US has done, unfortunately, for far too long – Russia needs to invest in infrastructure development, academia-business innovation parks, etc.

As for the gangster-ism and other such comments: You cannot maintain a healthy economy without a strong, multi-level system of laws, regulations, and courts. When property is seized for no apparent reason, when court decisions are passed down in a haphazard and arbitrary fashion, business confidence will weaken and so will the overall economy. Russia consistently ranks among the lowest on business hospitability indices.

Can we focus on the economy because whether we like or not, globalization has lead to intertwining of our economies. The West has invested heavily in Russia, there is nothing to celebrate on either side if the Russian economy shrinks further.

to tirellakov
shame on u what kind of white super power u r boasting about!!
whose women are doing prostitution all over the globe and men are criminals
u have home slook like stables even blacks have that kind of homes in usa which even middle class russians cant afford and cars which rich russians cant afford.
and ur homes are worse than stableas and u super power men die at 58 less than even indians what to compare with usa or europe.
i had been many times o russia and i know how poor and criminals many many russians are what cheap and fake vodka and cigerrates they smoke!!!!

Those that bag Russia should remember the robber barons in the US,
Russia is still in transition, and from down under we wish them all the best. George

Freinds, i have read your comment but i want more and prfect view on russian lifestyle, economy, women nature, average russian earnings etc. i m planning to expand my business to russia,

I agree with Aleksandr and Pepx comments. With all the revenue generated when oil prices were high, the leadership has failed to make the investments to diversify the economy away from commodities. Assuming the global recession is not a protracted one, they have a just to rectify this error.