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But while stimulus policies were mostly effective in

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Unformatted text preview: anges in external demand, but high oil prices are not enough any more and from the point of view of internal growth, expectations about growth in the second quarter come, first of all, from construction," said Natalya Orlova, an economist at AlfaBank. Construction was one of main drivers of Russia's stellar performance in the second half of the last decade, before the 2008 crisis brought a halt to virtually all projects. Oxley at Capital E conomics said the upshot is that growth will likely pick up in the second half, with pre -election spending taking hold and the spike in inflation fading to take some of the pressure off the central bank. "We would not say it's terminal yet for Russia," he said. "In the run up to next year's elections it is a matter of time before consumer spending picks up." 7|Page Russian Oil DA Affirmative BDL No Internal Link – Oil Decline Won’t Hurt Russia’s Economy [____] [____] Lack of economy reform also hurting the economy Euro News, 2012 (June 1, http://www.euronews.com/2012/06/01/rouble-tumbles-further-on-oil-price-slide/) The central bank played down the situation and said this was “absolutely normal volatility”. Deputy Chairman Sergei Shvetsov added: “It’s pretty OK with us.” Economists say the rouble’s fall also stems from disappointment among domestic and foreign investors in Russia at the lack of any drive toward political and economic reform since this year’s elections. 8|Page Russian Oil DA Affirmative BDL Internal Link Turn – High Oil Prices Discourage Russian Economic Reform [____] [____] High oil prices cause collapse of the economy because they discourage economic reforms Catherine Belton and Neil Buckley, W riters @ the Financial Times, 2011 (Russia in dilemma over Arab unrest, March 15th, http://www.ft.com/intl/cms/s/0/7dd04742-4f29-11e09038-00144feab49a.html#axzz1Mwr6tydD) But high oil prices have downsides. The oil windfall could restore Russia’s pre-crisis complacency, tempting it to backtrack on much needed reforms such as tackling corruption and reducing the state’s role in the economy. If the government uses the oil windfall to fund further pension and wage rises – with parliamentary elections looming in December, and a presidential poll next March – the economy will be left even more dependent on the oil price. “Already we are hearing less about the privatization program,” says a senior western banker in Moscow, referring to the $32bn state sell-off programme the government unveiled last year, partly to help shrink the deficit. The broader recovery in resource prices has also seen a resurgence of the oligarchs, bringing back the good times for Moscow’s restaurants, Porsche dealerships and real estate brokers. Forbes magazine said last week the number of Russian dollar billionaires bounced back from 62 to 101 last year, with Moscow home to 79 of them. Some analysts suggest the true number of billionaires could be even higher. Meanwhile, the wealth gap between the richest and...
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