2 thoughts on “Russian military spending, inflation-adjusted

  1. elmer

    How the hell is Roosha – Putler – going to spend on military when they are going down the tubes?

    Be thankful that Bloodimir Putler Khuylo is a total macho dupe idiot.


    Russia was sliding into decline before the storm hit this year. Its trend growth rate had collapsed. It was near recession when crude was trading at $110 a barrel, a remarkable indictment of Putin’s 15-year reign. The country has become reliant on the commodity supercycle. Oil, gas, and metals together make up 73pc of exports and half the budget. The economy is a patronage machine built on commodity rents, a textbook case of the “Dutch Disease”.

    The IMF says the effect has been to smother everything else, hollowing out the industrial core. Non-oil exports fell from 21pc to 8pc of GDP.

    The economy is a tangle of bottlenecks. Russia ranks 136 for road quality, 126 for the ability of firms to absorb technology, 124 for availability of the latest technology, 120 for the burden of government regulation, and 105 for product sophistication, in the World Economic Forum’s index of competitiveness.

    Critics say Russia squandered its chance to build a modern, diversified economy at the end of the Cold War. It now faces a bleak future as an ageing crisis hits and the workforce shrinks by 1m a year. Lubomir Mitov, from the Institute of International Finance, says Russia is weaker than it was in the Soviet era of the 1980s, when it still made things and brimmed with engineers. “They have lost their technology,” he says.

    Russia firms must repay $120bn of hard-currency debt over the next year. They cannot roll over the loans. Eric Chaney from AXA warns clients to brace for a wave of defaults by “non-strategic” companies.

    The Kremlin will prop up national champions but this bleeds their reserves. Browder says Putin is trying every trick to put off the inevitable, but capital controls are coming. “They won’t announce it: they will just starting doing it quietly by forcing companies to convert dollars into roubles,” he says.

    The Nordic bank SEB says the central bank faces a horrible choice between ferociously high interest rates – perhaps 100pc – or exchange controls. “We think it will reluctantly opt for the latter,” it says. SEB expects the Kremlin to freeze dividends and force companies to repatriate earnings. Isolation and Stalinist autarky lie ahead.


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