With oil wealth evaporating and international investments fleeing following the war with Georgia, Russia braces for more hard times.
Economists say Russia is indeed slowing – oil prices are in the basement and nearly $200 billion in foreign investment has left the country following the recent war with Georgia. This week, for the first time since the 1998 crisis, Russia’s long-term debt rating was lowered.
“As a society, Russians have been traumatized repeatedly,” says Martin Gilman, a former Russia-based official of the International Monetary Fund who now teaches at Moscow’s Higher School of Economics. “There’s a psychological component here, unlike with most people in the West, which has inured them to what’s happening now. But there certainly is a lot of confusion out there.”