Thursday, 17 February 2011

Standard & Poor´s: Russia in decline

In spite of all its natural riches, the medium and long term outlook for Russia is rather grim, according to a research note published by Standard & Poor´s:

Russia's debt may surge to 585 percent of gross domestic product by 2050 as the population declines and the government ramps up spending, pushing the credit rating below investment grade, Standard & Poor's said.
The population will probably shrink to 116 million by 2050 from 140 million last year, forcing the government's age-related expenditures to rise to 25.5 percent of GDP from 13 percent in 2010 in the rating agency's "base-case scenario," S&P credit analysts led by Frank Gill in London said in a research note last week.
The demographic decline will lead to "prolonged fiscal imbalances," putting Russia's credit rating under "rising pressure" after 2015, according to S&P. The government's debt is rated BBB at Standard & Poor's, two notches above junk.

Read the entire article here.

The problems described by Standard & Poor´s will, however, not affect Vladimir Putin and his henchmen in the Kremlin. As former Soviet President Mikhail Gorbachev indicated a couple of days ago, they have quietly been sending their money out of the country.

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