Chris Weafer writes: The crisis in Ukraine and the political dispute with the U.S. and EU could not have come at a worse time for Russia’s economy.
Economic growth had been sliding across most key sectors for more than twelve months, before the crisis escalated in late February as previous drivers of growth become exhausted.
The country clearly needs to boost both the volume of inward investment and the participation of international companies, with their expertise and technologies, if it is to pull out of the long slump into which it is now seriously in danger of heading.
The St Petersburg Economic Forum was supposed to be a showcase for Russia’s invigorated approach to business and investment reforms. It was intended to mark the start of the next phase of investment led growth intended to boost average annual GDP expansion to at least 4% to the end of the decade.
Instead, because of the sanctions already imposed by the EU and its partners in the G7 — but particularly because of the concerns over the risk of even tougher sanctions to come — many of the international companies which Russia needs to come have decided to delay Russia entry or expansion. Many of their CEOs, originally slated to attend the forum, are staying at home. [Continue reading…]