Indeed. I didn’t know much about Russian economics, so I read an article this morning on it. Putin has hung the economy almost entirely on natural resources, sort of as a boiler plate, since its all they have. The gas lines keep the place running, but that wont last forever and a ‘monoculture’ economy is never a good idea. Like China, Russia is sitting on underlying problems it has to address, and for the ruskies the key issue is extremely slow growth. 1% to be exact. It’s strange because with the meltdown of Europe in 2008, you’d have thought they would have poached businesses from the EU, but too many are scared off by the blatant corruption and also the flaring ethnic tensions in the country.
These bombings in Volgograd are not going to have helped, and if Putin wants to start fixing Russia’s long term economic outlook, he really does need to follow through with his promise and annihilate the Chechen terrorist threat. If anything happens in Sochi, its not Russia’s political pride that will be most bruised, it will be its economic prospects.
If you are to look further, natural resources doesn’t make much larger share in Russian than it is in US economy. I might be mistaking but IMHO it is around 15% for either.
On the other hand, oil and gas industries are taxed heavier than other businesses, let alone individuals in Russia and that is why oil brings the most revenues for a government.