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The three big rating agencies have all issued alerts over recent days, warning that the country's public finances are deteriorating fast and furiously. There is no prospect of an oil revival as long as Saudi Arabia continues to flood the market. Russia cannot borrow abroad at a viable cost.
Standard & Poor's says the budget deficit will balloon to 4.4pc of GDP this year, including short-falls in local government spending and social security. The government has committed a further $40bn to bailing out the banking system.
Vladislav Inozemtsev, from the Center for Post-Industrial Studies in Moscow, said the likely outcome is a retreat into autarky and pauperised decline, ending in withdrawal from the global trading system. “This way leads us towards a quasi-Soviet economy detached from the world and, at the same time, proud of its autarky; towards a deteriorating economy which compensates for the drop in living standards with pervasive propaganda,” he wrote
Some of you guys will enjoy the part of the article about America's oil production being a thorn in Russia's paw.
