Putin’s ‘I spend because I can’ approach spells more asset price volatility

Commenting last week on the outlook for economic growth in Russia, we argued that the increasing inflation seen since Q3/10 had boosted growth in the short term (by stimulating faster re-stocking) while constituting the main threat to the medium-term sustainability of the recovery. We also highlighted how the budget deficit had become the most powerful driver of inflation. We concluded that the single most important macroeconomic policy decision that investors should focus on this year...