Russian economy stagnates as presidential election approaches

 

Russian economy stagnates as presidential election approaches

By
Andrea Peters

10 March 2018

As the March 18 presidential election in Russia approaches, the Kremlin has sought to shore up the government’s position by highlighting indicators that the country’s economy is in recovery and promising to improve social conditions. While President Vladimir Putin is expected to easily win re-election, popular dissatisfaction with his regime has grown in recent years, bound up with an economic downturn linked to falling oil prices and Western sanctions.

Recent polls show a sharp dip in support for the Russian leader in the country’s large cities, with his popularity rating declining by 12 points in urban centers of a million or more people in February.

Evidence points to continuing economic stagnation and distress for the overwhelming majority of the population. In 2017, Russia’s gross domestic product grew by 1.5 percent, ending two consecutive years of decline. The uptick was largely driven by rebounding world prices for oil and gas, which continue to be the mainstay of the country’s economy.

Notwithstanding the Kremlin’s insistence that Russia can and must diversify economically, there are few signs that it is actually moving in this direction. Industrial production fell by 3.6 percent in 2017, due to a drop defense sector spending. Both federal and local budgets are dependent on revenues from natural resource extraction. Oil, gas, and metal ores alone accounted for 40 percent of last year’s increased tax revenue.

Gas and coal deliveries to the European market are currently at record highs for Russia. However, shifts in Germany’s energy policy and conflicts with Ukraine over transit routes through its territory threaten Russia’s position, reports the…

Read more