September 2, 2015
Aslund on Russia's Currency and Economy
That now looks optimistic. Anders Aslund, a Russia expert at the Atlantic Council in Washington, thinks 6% is more likely. Coincidentally, that’s close to what the Russian central bank predicted would happen if oil fell to $40 a barrel, roughly its current level.
The IMF now puts Russia’s long-term potential growth at 1.5%. Mr. Aslund thinks it’s just 1%, astonishing for a country whose standard of living is barely 40% that of the U.S.
Meanwhile, an expanding state-owned sector has undermined what private enterprise Russia had. Mr. Aslund cites the purchase by state-controlled oil company Rosneft of the well-managed, private competitor TNK-BP for $55 billion in 2013. Today, “value-destroying” Rosneft is worth less than TNK-BP was then. Western sanctions will further undermine productivity by depriving Russian industry, including oil and gas, of essential know how. As Western Europe seeks more reliable sources of natural gas, Russian exports will be further squeezed.