Economic slowdown forecast to continue

As the rails appear to come off the Russian economy, with capital flight on the rise (up to USD 13.6 billion in the third quarter of 2012 according to Kommersant on 4 October), the IMF forecasts that the global economy won’t recover until 2018 at the earliest

Now the extent of the decline will play a decisive role for President Putin – already companies in Moscow are laying off staff or giving them extended unpaid leave in anticipation of a crisis. Given that the bigger players are channelling even more of their incomes offshore, the economic outlook would appear bleak.

Until now Putin has managed to quell unrest through legislation virtually banning any protests and selective arrests and also by expecting people to toe the line of no democracy in exchange for a booming economy and safe jobs.

As he is unable to quell increasing levels of capital flight (and no doubt sending more of his illicit earnings to German bank accounts), the question is whether Putin will seek to tighten the screws, make some high-profile arrest to distract attention, or just play a waiting game.

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