JRL NEWSWATCH: “Russia’s War-Torn Economy Hits Its Speed Limit” – WSJ
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“Economists see this week’s currency gyrations not as the beginning of a financial crisis but rather as a symptom of the Kremlin’s sclerotic economic prospects.”
“The Russian central bank’s jumbo interest-rate increase to halt a tumbling ruble … points to a new reality …. The government has flooded the Russian economy with money to keep … troops in Ukraine supplied and insulate … businesses and citizens from the war. Thanks to the state’s largess, demand in the economy is rising, helping it recover from last year’s sanctions-induced recession. Supply — increasingly constrained by Russia’s isolation and widespread labor shortages — isn’t. That growing imbalance … was thrust into focus … as the ruble fell to its lowest level since the early days of the war. … Russia’s growing technological isolation is expected to reduce … long-term growth prospects … [already] bleak … before the war. The … labor force has been shrinking … as [Russia’s] population ages. Productivity has been weak owing to a lack of investment and a business climate rife with corruption and bureaucracy. Those trends have … worsened …. Russia … [has] its worst labor shortage since the 1990s [after] hundreds of thousands … mobilized for the front or … fled the country. …”