Russia and CIS satellites failing to impress – ECR Q2 2013 results

By:
Jeremy Weltman
Published on:

With one or two exceptions, the majority of former Soviet independent states, alongside Russia, have become riskier this year, continuing longer-term trends.

Diminishing economic growth is imparting a negative impact on the region, especially in light of the slowdown in Russia (Russia: Stagnant oil price dampens economic outlook).

However, the risks are also tied to worsening perceptions concerning other indicators, and for a variety of reasons, ranging from Russia’s institutional underpinnings and corruption record, and government stability in Azerbaijan, to currency and information access/transparency concerns in Ukraine and Georgia’s regulatory and policy environment.

The Kyrgyz Republic and Moldova – the latter especially – have seen their political risk profiles downgraded sharply, highlighting the region’s flaws, its failure to capitalize on the eurozone’s worse risk-return opportunities, and why Russia, ranking 62nd globally, is still the only country to score more than 50 out of 100.

As Constantin Gurdgiev, an ECR Russia expert and adjunct professor at Trinity College Dublin, says: “Increased risks associated with the Russian economy relate to the lack of structural drivers for growth, lagging reforms and low returns on reforms already enacted, plus the overall downward revision of the emerging markets and commodities in the environment of highly uncertain and subdued global growth.

“Institutional capital is lagging and remains largely unaffected by reforms-rhetoric. If anything, the past 24 to 30 months have seen sustained deterioration in the reforms effort. The comprehensive agenda for modernization of the economy has been pretty much frozen, if not abandoned.”


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