Russia’s economy has struggled over the last three years. Falling oil revenues, sanctions from western countries in response to the occupation of Crimea, Russia’s self-imposed ban on food imports, a sharp currency depreciation and large outflows of foreign capital have caused economic hardship. But the outlook is looking brighter with the recovery in oil prices and greater economic stability. Russia will need to diversify the economy away from the energy sector. But fiscal consolidation and limited fiscal space will make implanting policies that encourage diversification and long-term productivity growth difficult.
Russia’s per capita income has fallen sharply since 2014 as the country has slipped to middle income status after reaching high income status a few years ago. There are also chronic levels of inequality with 110 people out of a population of 140m, controlling 35% of household wealth