In no less than Financial Times which specialized for the least 5-6 years in burying Russia on a monthly bases and in anticipation of Putler Regime's (low on wokeness, LGBTQINSBD rights, and high on anthropogenic climate change denial) collapse due to its undemocratic practices which insult modern West's sensibilities--you know, like identifying only two genders. Yet, even Financial Times begins to suspect something in its latest about Russia. Remember, for years I, among very many people of different walks of life, stated that Western sanctions are very good for Russia and Russians are terrified by possible lifting of those. Well, what do you know:
Now Russia's main strategic secret is out and some more-or-less competent observations are being made. About time. Of course people in Financial Times do not understand the real size and scale of Russian economy and repeat same ol' monetarist BS (accidentally, responsible for driving US and UK's economies into the ground) that Russian economy's size is $1.7 trillion, but let's forgive victims of Wall Street make believe world of virtual, zero value added, FIRE economics, and concentrate on what this establishment rag got right about Russia. Here is what they got right:
Russia’s response to the sanctions focused on three key areas. First, it tightened its belt, cutting public spending and forcing its banks and major corporates to clean up their balance sheets. That was partly due to the slump in foreign credit caused by sanctions and investor sentiment, and partly due to a sense that the economy needed a safety net. Second, it spent trillions of Rubles on programmes to create domestic substitutes for imported goods, while food imports from the EU were banned in order to stimulate local production.... And third, it overhauled how Russia spends the vast proceeds from selling oil and gas. Income from energy exports above a certain level was diverted into a national wealth fund, which ended a pattern of boom-and-bust caused by government spending linked to the oil price. It also, almost overnight, severed the bond that had seen the Ruble move in tandem with energy markets. The results have been impressive. All three levels of Russia’s government ran a budget surplus in 2018 and 2019, and its total public debt is about 15 per cent of GDP. The EU average is 80 per cent.
The main thing, of course, are not just financial indicators, however important, the main one is what author numbers as a second one, because the real value and national security is in the field of real industries. While doing so, Russia very fast re-oriented herself to Asia and decreased dramatically reliance on Europe (US is not even a factor here, with Russian-American trade being minuscule). As our perceptive, and wonderfully prescient and consistently, over the years, spot on, friends from Awara Group state:
Due to Russia’s globally by far lowest debt levels across the economy and strong government finances, the ruble should remain stable. Indeed, the ruble seems to have successfully decoupled from the dollar domination as it has shown remarkable strength through the financial upheavals and global tensions of the past few years. This in turn, in addition to the weakening global economy, should keep inflation pressure in check, notwithstanding all the growth-boosting stuff on the domestic front. It is possible that emerging market currencies, and the ruble with them, would come under attack in connection with a potential global financial market hysteria (including a drop in oil price) connected with the coronavirus outbreak. Even so, the fundamentals for the ruble are so strong, that it should recover soon again.
Russia’s expected to grow faster than the WestPotentially, this all could translate into 2-2.5% GDP growth or even 3% at best. But with all the global uncertainties there is no firm basis for making those forecasts. The IMF’s forecasts for 2020 GDP growth are for the global economy 3.3%, the US 2.3%, and the Euro Area 1.3%, among which Germany 1.1%. The forecast for Russia is 1.9%. Considering that Russia will reach 1.4% growth in 2019 against IMF forecast of 1.1%, they are probably underestimating 2020, too.
Of course, we should keep global economic risks in mind, but here is this funny little fact: as Patrick Armstrong likes to characterize Russian economy--it is a "full service economy". It is also inward oriented. There are 146 million Russians (plus around 60+ more from former Soviet republics) and this market is far from having its full potential realized. The synergy is obvious: even Maternal Capital alone creates circumstances which will see construction industry grow, which, in itself, creates momentum for a variety of industries, such as building of the Crimean Bridge spurred the growth of metal structures production, together with a lot of other adjacent industries. The rate of "domesticating" industrial production in Russia is impressive. Consider this seemingly "insignificant" news which, naturally, were drowned in the information noise the global chaos produces: Russia now produces satellites completely on Russian-made electronic components (in Russian). For those in the know, that speaks volumes. Big-big volumes.
This piece in FT came out within a month of this piece by Center for Naval Analysis. Same as very fresh CFR's "22 prescriptions". What is going on? That is a higher density of more-or-less common sense than usual? Especially considering a prominence of institutions which demonstrated this rudimentary common sense. Do they begin to suspect something? Maybe, that the real world is a bit different from fantasies and operates on a different premises, than was assumed before? Could this be first signs of at least some sobering among the "elites"? Difficult to say, but the geopolitical shift is so massive that it can neither be described nor judged by means of beaten to death and false, always stillborn, models. Maybe Financial Times' analysts would not mind taking some lessons from Awara Group or Michael Hudson? I know they need them.
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