London, 11 December 2009 

Russia's boom in 2003-2007 was driven by rising oil prices and capital inflows. In mid-2008, Russia was hit by a commodity price shock and a reversal of capital flows. A deep recession followed. However, the situation has started to stabilise as of mid-2009. 

Massive monetary and, with a delay, fiscal stabilisation efforts have provided support, as have higher oil prices. It is still open whether Russia will be able to reduce its vulnerability to oil price fluctuations by generating non-oil growth. An improvement in Russia's conditions for doing business would be necessary to improve the country's growth potential. Nevertheless, economic growth at reasonable rates is feasible. Average GDP growth of 4% p.a. over the next few years is a plausible baseline, with risks on the upside.

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