Prepare for Russia to Bounce with the Oil Price

The Russian macroeconomic environment is surprisingly benign. Unemployment remains stable and the country will still run a current account surplus this year 

External Writer 23 February, 2016 | 8:00AM
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Morningstar's "Perspectives" series features investment insights from third-party contributors. Here, Hugo Bain, Senior Investment Manager at Pictet Asset Management who has just spent a week in Russia gives his views on the regional outlook.

Calm. That is the surprising feeling after spending a week on the ground in Russia. This in itself is a remarkable achievement. Considering the fall in oil prices and the sanctions imposed by the West, I would have expected that Russia would be in a full blown crisis by now; the fact that the economy is in recession and not in a black hole can be seen as a positive; people are still employed, companies are under some strain but are not going bust, restaurants are full and President Putin remains popular. Maybe Russia is getting better at managing crises, given the frequency with which they happen.

When I was in Moscow, there was very little talk of either Western sanctions or Ukraine or Syria. While it is clear that sanctions have been effective in limiting access to some goods in Russian stores, the significant decline in oil prices, and the resulting fall in the Ruble, has had a much greater impact.

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