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A Real Exit?

Today’s news has seen upbeat reports about Russia’s economy waving goodbye to the crisis, with Alexei Kudrin breaking the good news of a possible ‘exit’ from the depression, reporting strong third quarter growth (this growth, mind, has less to do with strategic planning than with increased oil production.  Russia’s production levels are at a record high, in direct counteraction to OPEC’s efforts to raise demand).  Deputy Economy Minister Andrei Klepach has chimed in with the good news, suggesting the fourth quarter may see economic expansion of as much as 4%, as the stage is set for foreign investors, with the government’s  announcement that the state will be selling off some assets in 2010.  

But surely, it can’t all be good news.  At least, not when the source originates from somewhere other than the Russian government.  Reuters columnist Jason Bush suggests that the recent retreats of Carrefour and ABB may herald deeper issues:

It’s not exactly news that Russia is a challenging place to do business. And it’s too soon to say whether these changes-of-heart represent a more general disillusionment on the part of major foreign companies.

What is obvious, though, is that the risk-reward calculus facing investors in Russia has changed dramatically since the onset of the economic crisis. Even though Russia’s economy is returning to growth, nobody is predicting a rapid return to the hectic growth rates of 7-8 percent. Meanwhile, the legal and political risks remain as challenging as ever.

Read the full article here.