How to understand Russia’s inventory cycle

Overview

With the Russian economy mired in recession during 2009, the inventory cycle attracted increasing attention – both as a powerful and hitherto underemphasized explanation of the slump and as a potentially strong driver of recovery. In our view, this is the wrong way to think about the present dynamic of inventories and their relation to economic growth. Instead, scrutiny of the inventory cycle highlights the probability of real growth falling short of consensus expectations in...