Russian Economy to Face 20 Years of Underperformance

Russian Economy to Face 20 Years of Underperformance (Reuters)

Russian Economy Minister Alexei Ulyukayev stated his country’s expected rate of growth over the next two decades would be 2.5 percent. That pace is down from the 4 percent goal set by President Vladimir Putin and would trail global growth.  This announcement could work to undermine Putin’s power base as he continuously has promised to make Russia one of the top five economies in the world. Unfortunately for Putin, Russia’s financial future is chained to the price of oil, as it’s the world’s largest producer. With the U.S. flooding the market with its cheaper shale oil, Russia’s $2-trillion economy has slowed sharply — a downturn that has coincided with Putin’s returned to the Kremlin in May of 2012. Looking ahead, investors should keep a watchful eye on any Russia-related investments, since this forecast could mark the start of a long, hard road for Mother Russia.