EDITORIAL: A Double-Dip Recession for Putin’s Russia?


A Double-Dip Recession for Putin’s Russia?

“The economy has grown by an average of 0.5 percent per month over the last five months.  I’m counting on these positive trends in economic development becoming more significant in the middle of next year.”

–Vladimir Putin, answering citizen phone-in questions last week in Moscow

Is Russia heading for a double dip?

Not so fast, Mr. Putin. Not so fast. 

The brilliant Russia economist Edward Hugh, blogging at Eastern European Economy Watch, offers a wealth of data indicating that Russia is heading for a double-dip recession which may well send the Russian economy into another massive tailspin. Should the price of oil fall again, this time it could easily be fatal.

Russia’s Capital Total Activity Index and GDP Indicator both saw turnarounds in their growth patterns of previous months, and began heading back for negative territory while the Russian Manufacturing PMI index remained in negative territory for a second straight month, and was worsening.  Hugh writes that “the quarter-on-quarter [GDP indicator] rate [shown in the chart above] slipped back to a bare 0.2%, treacherously close to the dividing line between contraction and expansion.”

He explains:

The outcome is not surprising when we take into account that November saw an overall deterioration in business conditions in Russian manufacturing for the second month running. Output rose only marginally, while incoming new orders fell for the first time since June. Growth of purchasing activity was maintained, but at a slow pace, while employment continued to fall.

He adds:

The headline seasonally adjusted Russian Services PMI came in at 53.3, down on the 54.3 registered in October, and well below the historic average of 56.9, highlighting the fragility of the Russian recovery. Restricted credit continued to be a theme in this months survey responses, although sector data pointed to a stronger rise in financial intermediation activity. The rate at which incoming new business increased slowed during the month and contributed to additional spare capacity at service providers and a faster decline in outstanding business. Backlogs of work have contracted every month since September 2008, and the latest rate of decline was at the most rapid rate since July.

All this is only to be expected from an economy so utterly lacking in basic fundamentals as Russia’s.  The only “progress” that the Russian economy has made under Vladimir Putin is that the price of crude oil has spiked up.

8 responses to “EDITORIAL: A Double-Dip Recession for Putin’s Russia?

  1. Dear La Russophobe

    I do not understand why you call yourself “Russophobe” when in fact you are “Russophile”. You worry about Russian more than most of them do. You also dedicate so much of your time for free to this country. You don’t even have commecial ads on this website. You must be called “La Russophile”. Don’t you find that some people are confused by your name – they think that you maybe make some facts darker than they actually are. When in fact you simply show reality in Russia and you genuinely wish this country well, unlike their government and citizens. You are true Russophiles.

    Thanks anyway, heroes!

    • The thing is La Russophobe is really for people who can see and understand Russia as is. Not more not less. It is hard thing to do, besides of usual arrogance, it’s also quite easy to fall into a trap and say – eh no country is saint.

      La Russophobe sees a terrible evil that can sing the world. Yes, yes, I’m not joking. This Evil has a biggest arsenal of Nukes on the planet. Controls the big chunk of the world with it’s Energy and corruption claws and grows a nationalism and propaganda at home, brainwashing millions and millions…

      It is easy to see why some people worry so much. By wanting to change Russia for better we also want to save humanity from the huge price that we all might need to pay, if it gets too late.

      The time is ticking…

    • It’s because the Russian government routinely accuses their critics of “Russophobia” (and “double standards”).

      For example, Putin’s aide Yastrzhembsky (a sample of this guy on some website called “Voice of Russia”: http://www.vor.ru/VIS_A_VIS_new/Yastrzhembsky.html – “Maskhadov was elected President by his people. He must lay down his arms and stop fighting back.”) in the article “Russophobia Still Rampant”: http://www.sptimes.ru/story/7071 (just check out this stuff).

  2. KGB comrade,

    “The ICBM’s are getting fueled. The twilight of the West is nigh. Muahahaha.”

    Russia does not have the upper hand, you may have more warheads than the rest of the world. I personally would not be proud of the reason.

    Depleted financial resources have made the destruction of unfissionable nuclear material impossible. Nevermind the the seventy percent failure rate of Putin’s new multi-warhead spacelift vehicles.
    Are those liquid fueled too?

    Strategic Arms Limitation Treaty and Strategic Arms Reduction Treaty be damned.

    The number of warheads is irrelevant if you can’t put any of them on target.


  3. Also by 2020 50% of Russia’s warheads will be passed the time they can be used and will be more of a risk to the Russians than us.And if you recall a town in Russia was almost blown apart by munitions that were old and unstable. So all we need to do based on recent history is to sit back and wait for the “firework show”

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