It has simply not been accompanied by the fanfare surrounding Saudi Arabia’s plans to prepare for end of the oil era.
As the oil price tumbled and the economy plunged, some industries have emerged triumphant.
“New economic drivers are evident in the spheres of agriculture, food, chemicals, and domestic tourism,” said Maksim Oreshkin, Deputy Finance Minister, in an interview. “Yet they cannot make up for the structural decline in non-tradable goods sectors."
In the first quarter the economy shrank less than had been forecast, possibly hinting at the end of the most enduring recession in two decades.
The shock therapy had been long awaited, including the Central Bank’s decision to loosen its grip on currency in November 2014. Yet, the most damaging factors were western sanctions and dwindling demand in energy markets. The economy turned to the consumer sector to offset the $2.1 trillion lost by the crash in the energy industry, which had previously fueled domestic demand for over a decade.
Despite spiraling inflation following the collapse of the rouble and declining consumer demand due to cuts in wages, one way to assess economic adjustment is to examine the currency's effect on consumer prices. According to Morgan Stanley, its impact on annual inflation fell to 0.2% compared to 4.5% in 2015.
As oil prices have struggled to bounce back, the past two months' inflation reached 7.3% compared to last year, descending from its 13-year high of 16.9% in March 2015, making the Central Bank reset to its 4% target for 2017.
The agriculture sector's share of GDP grew to 4.4% last year, the highest since 2003. The weakening rouble and Western sanctions helped towards the industry’s success, which lessened the economic damage.
“Devaluation benefited some industries but it was a one-time gain,” stated Evsey Gurvich, head of the Economic expert group in Moscow. “They’ve seen considerable advances, but the major overhaul hasn’t begun yet. We need investment, reforms and faith from investors,” he added.
Though, considerable progress has been made already, the business climate in Russia remains tumultuous. In the World Bank’s 'Doing Business' report this year Russia was ranked 51st globally, as reported by the agency.