Higher oil prices, state investment and Central Bank activism have maintained surface stability in the Russian economy this year, but there are still significant undercurrents that could serve to accelerate political reforms in 2018.
A worrying few years lie ahead for Russia’s economy. The Russian government is cash-strapped at both national and regional levels, and it will be education, health, wages and welfare that take the hit. High military spending is set to continue.
Russia’s regional governments owe vast sums to commercial banks and the federal government in Moscow. Those debts are spiralling out of control and need repaying. But where will those repayments come from?
Russia’s Central Bank launched a recent clean-up operation to stop Russia’s largest private bank Otkritie from going bankrupt. A one trillion-rouble “hole” had been discovered in Otkritie’s assets. Almost immediately after that, the Central Bank had to bailout another – BinBank, Russia’s 12th largest. Where does this leave the country’s private banking sector?