Less than three months ago, one would have been either crazy or intrepid to invest in Russia in 2015, after the ruble (RUB) had fallen sharply against the dollar (USD) and the drop in national economic growth had been forecast to be more than alarming. Although Russia’s economy has contracted for the first time since 2009, the GDP has decreased 1.9 percent in Q1 2015 year-on-year, indicating it has been far less worse than the expected minus 2,6 percent. As soon as April 2015, there had been indications already that Russia was actually more resilient, escaping from so-called impending banqueroute as the RUB recovered 33% since its lowest level of January 30, 2015 and the oil prices, of which a large part of Russia’s GDP and public budget depend on, jumped back from $44 to $52 per barrel – and is now hovering around $59-$61 per barrel.
A bit like when many experts announced three years ago that Bashar Al-Assad was just days away from being topped out – Assad, although very weakened, is still the President of Syria today – it seems that Russian President Vladimir Putin’s political status has never been threatened in any way. Those who talked a month ago about a possible coup brewing behind the scenes might review their assessment because in spite of severe sanctions over the Ukraine conflict and very adverse economic circumstances, Putin and his government have rather well navigated through the storm. Inflation remains a central issue and the loss in GDP growth is significant, however Russia’s economy has once again showed a certain capacity of resistance. Moscow’s emergency in the next days or weeks will be how to assist Assad against the dramatic advances of ISIS in Syria while the economic waters become calmer. No respite for Russia.