NEWSWATCH: “Russia’s renewed might rests on weak economic foundations. Putin bravado does not extend to modernisation of the economy” – Financial Times/Neil Buckley

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… the gap between the image … Putin portrayed … and the reality was exposed by a sobering assessment of Russia’s economy by another senior official … further emphasised by a draft budget … envisaging a 27 per cent cut in defence spending …. the official … made it clear how Russia’s ambitions clash with its capabilities. … western sanctions imposed over Ukraine have exacerbated its problems, knocking up to 1 percentage point off annual growth …. the bigger issue is Russia’s long failure to undertake structural reforms to reduce reliance on energy …. Output, in constant rouble terms, has not grown since 2008.

Russia must grow by nurturing new industries outside … oil and gas … the official said. It needed to offset a declining labour force with productivity increases. It must stimulate ‘innovative’ technologies, which accounted for a much smaller proportion of its economy than in leading developed countries. But all that needs investment …

Click here for Financial Times/Neil Buckley: “Russia’s renewed might rests on weak economic foundations. Putin bravado does not extend to modernisation of the economy.”