The RTS is surging, oil comfortably trading around $70, and even Vladimir Putin is doing his topless thing again, which is always a sign of economic robustness. Despite all the rosy news, Owen Matthews at Newsweek thinks that the crisis may not yet be done with Russia.
Don’t be fooled: Russia’s still reeling from the commodities crash, and things are poised to get worse before they get better. Putin’s oil fund will be “practically exhausted” by the end of 2010, says Finance Minister Alexei Kudrin. By the Russian government’s own estimate, the economy will shrink by up to 8.5 percent in 2009. Worse, many Russian businesses appear to be all but insolvent. They face a $200 billion mountain of debt, much of which comes due this fall. With Russia’s indebted businesses expected to net a mere $70 billion in profits this year, that leaves a potential $130 billion private-sector shortfall.