Russia in the global crisis, 2008-2009: An initial assessment

The global financial crisis hit Russia hard, in particular manufacturing at the end of 2008 and during most of 2009. The reasons are complex. Commodity prices (in particular, oil) dropped suddenly but for a very short time, but this does not account for the brutality of the recession experienced in Russia. A much more important factor seems to be the Central Bank's monetary policy, modeled on the new monetary consensus. The misguided response of monetary authorities to the situation set off a credit crunch that had a negative impact on domestic consumption and destabilized the whole economy. The government's relatively effective measures for handling the crisis avoided the worst-case scenario. The Russian model of development seems to have been saved. However the contradiction is keener than ever between the aim of turning Moscow into a leading world financial market and the current program for rebuilding Russian industry.