The major index providers have eliminated Russian companies from their global and regional indices for the most part, Russia has essentially completely blocked the trading of Russian equities by foreign investors, and Western sanctions aimed at the trading and ownership of Russian equities, bonds, and other assets are further exacerbating the situation. At the same time, no one knows what the situation will look like a few months from now, and the events in Russia and Ukraine naturally have potentially far-reaching consequences for virtually every nation of the world. Therefore, we will continue to monitor and discuss the developments in Russia.

Safe win with questions

Russia’s president Putin won his re-election with around 88% of the votes. This is a record in post-Soviet Russia. The official voter turnout was 77.5%, 10% higher than for the last presidential election. Critics point out the lack of or blocking of serious alternative candidates and widespread election rigging. The votes actually cast for Putin were supposedly 25% to 40% lower.

Recent robust economic growth

The IMF has again raised its growth projection for Russia. At 3.2%, the Russian economy is expected to grow more rapidly than the developed nations in 2024. However, the IMF sees significantly slower growth of “only” 1.8% in the following year. How difficult it is to predict Russia’s growth under the current conditions is borne out by the fact that the IMF recently still only expected 1.1% growth for 2024. It is worth noting that other analysts are projecting lower growth, for example Raiffeisen Research with 1.5% expansion for 2024.

China as a lifeline

Russia’s (at least seemingly) strong economic development is being driven primarily by high investments, the production of war materials, and robust private consumption. According to a Gallup poll in December 2023, around 56% of the polled Russians see an improving economy and 46% also see their standard of living rising, which is a new record. Especially Russia’s rapidly growing trade with China (around USD 240 billion in the past year) but also with India and Turkey has largely nullified the effect of most western sanctions to date.

Many questions for the future

How long this strength will persist is a different question entirely. The government will likely only be able to sustain its current spending level for a few years, and India significantly reduced its oil imports from Russia (at least officially) recently in response to increased pressure from the USA and G7.

The stock market in Moscow climbed by around 2.3% in March (local currency), with the rising oil price of course lending support. The increase was less than half this much in dollars.