Is Investing in Russia A Good Move?

Is Investing in Russia A Good Move? - at www.moneyweek.com - the best of the international financial media

Though weakened by crisis in 1998, Russia has staged a remarkable turnaround. Its economy now ranks amongst the world's most dynamic. Skyrocketing oil prices are certainly part of the reason. In fact, Russia is the world's second-largest exporter of black gold, and it is sitting on the eighth-largest pile of reserves.

Here we review the Russian crisishow it began, how it unfolded and how it endedas a prelude to analysing its recent economic performance. The macroeconomic picture that is coming into focus right now, driven by surging oil prices, combines strong growth, an improvement in the public finance situation, an enhanced trade balance, abundant reserves, massive debt paydown, tighter spreads and good stockmarket index performances. All of these factors argue in favour of optimism on Russia, against a backdrop of persistently high oil prices. However, a few shady areas persist: inflation is high and the flight of capital has picked up in the wake of the Yukos scandal. Under the circumstances, is it wise to consider Russia as a sure thing?

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