While I’m not surprised to see the weekend press dominated by the impact of sanctions on Russian macro, I have been pretty clear in saying the Russian economy was headed for flat to slightly higher (+0.5%) GDP growth in 2014 unless the world economy demanded much greater from the commodity space.
Vladimir Putin will be inaugurated for his third term as Russia’s president today, and with typical grandiosity has declared a national holiday in his own honor. Looking at the Kremlin’s pomp and circumstance, it would be easy to forget that the mass protests in the streets of Russia last winter ever happened.
After bestowing big tax breaks on state-owned energy companies for developing Russia’s offshore Arctic oil and gas reserves, Vladimir Putin threw a crumb of hope to the country’s independent drillers.
Economists are still digesting Vladimir Putin’s vow to spend an additional 1.5% of Russian GDP during his campaign to retake the presidency. Given the intimate relationship between the Russian economy and oil, keeping that promise requires certain assumptions about global energy prices to come true — and these assumptions have a direct impact on U.S. households.