November 2014
by Natalia Gurushina, Chief Economist, EM Managed Debt Funds, VanEck

Russia's political and economic outlooks remain precarious. There is no obvious way to resolve the Ukrainian crisis which means that sanctions will not be lifted any time soon. This will continue to weigh on Russia's growth while keeping inflation pressures up. One piece of good news is that Russia's current account is in surplus for now. However, capital outflows are large and the CBR is losing reserves at an alarming rate trying to prop up RUB. Lower oil prices also pose risk to Russia's external balance. Even though Russia's international reserves are still around 20% of GDP – multiple claims on them are likely to increase if Russian companies and banks remain cut off from global financial markets.

Russia: Reserves and Oil

Source: Bloomberg

Russia: Real GDP Growth and Inflation

Source: Bloomberg

About the Author:
Natalia Gurushina (PhD, Economic History, University of Oxford, 1995; BA, Economics, Moscow State University, 1989) serves as Chief Economist for emerging market managed debt strategies at VanEck. She has more than 15 years of industry experience including responsibilities at Roubini Global Economics, Pantera Capital and Deutsche Bank.

The article above is an opinion of the author and does not necessarily reflect the opinion of MV Index Solutions or its affiliates.