Russia's post-crisis growth: its sources and prospects for continuation

This article provides an in-depth analysis of Russia's post-crisis growth, with a view to understanding the prospects for its continuation. It examines in detail the chief drivers of growth, as well as the main developments and policies that have been underlying it. A key finding is that the role of the oil sector, and particularly privately owned oil companies, has been vastly more important in driving economic growth from 2001 to 2004 than thus far recognised. The oil sector's contribution to growth has hitherto been severely underestimated because official data do not account for transfer pricing and thus fail to fully reflect the importance of the hydrocarbon sector in the Russian economy. In the light of this finding, this article also assesses the economic impact of the ‘Yukos affair’. Looking forward, it is reasoned that—given its economic structure—Russia is bound to remain a heavily resource-dependent economy for some time to come. The article further argues that, given good macroeconomic management and the avoidance of gross policy errors, Russia could realistically hope to sustain high growth rates over the medium term. However, given current tendencies for greater state involvement in key sectors of the economy, such an outcome is not by any means guaranteed.