The Russian Enigma
Despite low oil prices and reduced inflation due to lower consumption, Moscow's economy belies the forecasts of international analysts and also passes, without excessive damage, the sanctions test

The rise in oil prices supports analyses which predicted the stability of the Russian economy, despite the severity of its crisis. Other statistics confirm “the Russian enigma‘, or the vast country’s systematic escape from the various predictions of defeat, the final catastrophe that has always accompanied it. Year-end inflation has in fact decreased due to lower consumption. In January, it slowed down to a single digit so as to absorb the depreciation of the ruble and grant other monetary accommodation margins. Moreover, the decline in disposable income was higher than 5% last year, with reduced salaries and alarming impoverishment. However, the state budget is calculated at 0.6% deficit in the period of January-November 2015, and the percentage of people below the poverty line would result in containment, according to the World Bank. The forecasts on industry, however, albeit slightly improved, continue to remain negative. Many analysts, however, expect a strong recovery in exports. The situation certainly remains problematic, measured only in terms of economic variables. However, a significant resumption in Russian exports is expected in 2016. Also, the common intentions of the Russian and Iranian foreign policy can come into play and introduce significant changes in the complicated geopolitical chess game between Russia’s interests and the opposing interests of Saudi Arabia. To what extent and in what periods of time is another matter, considering the various wars underway in the Middle East and the turning point in progress of the American economy cycle.

An economy that does not waver, despite everything

The scenario that emerges is very different from that forecasted by many analysts in the aftermath of the sanctions and during the oil price crisis. Even the Americans are starting to take note. "The economy has held up surprisingly well considering the stresses it has undergone,‘ said Christopher Miller, of the Brady-Johnson Gran Strategy Program at Yale ISS. Then, reiterating that "the reason is that since 2008 government policies have been relatively effective,‘ Miller specifically praised the decision of Moscow’s government to gradually increase taxes on oil and gas to 15% since 2014, a measure that has reduced the tax burden on other industries. However, all of the shrewdest commentators have in recent months emphasized the decision to let the ruble move to a floating exchange rate, so as to conserve reserves and better absorb the shock of the fall in oil prices, saving the state budget. The goal to get more rubles per energy export unit has worked. In fact, the term margin of the Russian state reserve fund was stretched in the forecasts of almost all analysts by at least one year, until 2017. Moreover, the small extent of the deficit may be covered by issuing domestic debt. Nor can a further decline of the ruble be excluded. In conclusion, for now, the nation puts up with the deterioration in the living standards of wage earners, of pensioners and the increase in poverty. The Russian enigma still takes the same form: the nation’s ability to hold up has often exceeded the forecasts of its opponents.