https://www.economist.com/finance-and-economics/2022/10/11/as-europe-falls-into-recession-russia-climbs-outI'm torn between "Everything The Economist says is bad analysis" and "When The Economist is saying positive things about the enemy, it's bad for the West."
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Despite these difficulties, the recession has probably now come to an end. Many people doubt official gdp data, but it is possible to get a sense of activity from a range of sources. Goldman Sachs, a bank, produces a “current-activity indicator”, which suggests how economies are doing from month to month. The data indicate that Russian activity is quite a bit livelier than it is in big European countries (see chart). A spending measure produced by Sberbank, another bank, wobbled following the mobilisation decree but has since edged back up. Output in the car industry, which a few months ago had practically fallen to zero, has also bounced back, suggesting that producers have managed to source supplies from outside the West. In dollar terms Russia’s monthly goods imports now almost certainly exceed last year’s average.
In its latest forecasts, published on October 11th, the imf upgraded Russia’s economic prospects for this year. In April it thought that Russian gdp would fall by 8.5%. It now expects a decline of 3.4%. This is nothing to gloat about, but it is manageable. Indeed, the economic data suggest that Russia will be able to keep fighting. In late September the government put out a draft budget for 2023 to 2025. According to Elina Ribakova of the Institute of International Finance, an industry group, the budget implies large increases in war-related spending in the coming years—particularly on internal “security”. Having avoided economic collapse, Mr Putin expects to double down, both abroad and at home.
Meanwhile in Europe:
https://www.shine.cn/news/world/2210121403/Economy Minister of France gripes about all the decisions that his country and other European leaders made, but tries to deflect culpability onto the Americans. Anyone but them must be responsible for Europes descent into capital flight and deindustrialization:
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Speaking to the French National Assembly, Le Maire said he feared the United States (US) could benefit from the situation to the detriment of European interests.
According to Le Maire, the US sells its liquefied natural gas (LNG) to Europe at "four times" the price at which it sells to American suppliers.
He insisted on the need to build "economic relations that are more balanced on the energy issue between our American allies and the European continent."
And in Ex-euro Britain, here's a good thread on the gilts meltdown in the UK and it's risk of spread to the EU both through contagion and systemic rationales:
https://threadreaderapp.com/thread/1580285433573150720.htmlQuote
In short, Europe is going to learn two painful economic lessons this winter:
1- a significant portion of European prosperity was built on access to cheap Russian gas.
2- capital is international, has no loyalties, and the US is throwing a welcome party.
This post was edited by kusotarre1 on Oct 12 2022 10:13pm