World Bank2014-10-162014-10-162014-09https://hdl.handle.net/10986/20439Russia's economy is stagnating. Seasonally adjusted growth for the first two quarters of 2014 was near zero. Consumer and business sentiments were already weak in 2013 due to lingering structural problems and contributed to the wait-and-see attitudes of households and companies. Heightened market volatility and policy uncertainty due to geopolitical tensions during the first half of this year exacerbated this confidence crisis. The Russian economy needed to internalize several rounds of sanctions, countersanctions and measures to stabilize the economy; this environment of higher risk lowered domestic demand. While the macroeconomic stabilization measures were timely and successful, medium term policy objectives are still being defined. This continued policy uncertainty about the economic course of the country is casting a shadow on Russia's medium-term prospects. Prospects for further poverty reduction and shared prosperity are limited. In the past, rising wages and pension transfers allowed Russia to reduce poverty significantly and to expand the ranks of the middle-class. Unless structural reforms to expand the economy s potential are pursued, low investment makes it less likely that plentiful well-paying jobs will be created. High inflation, moreover, will slow real income growth and hurt consumption growth, dimming the likelihood for further poverty reduction and limiting the ability of the bottom 40 percent of the population to share in prosperity.en-USCC BY 3.0 IGOACCESS TO FINANCINGACCESS TO INTERNATIONAL FINANCIAL MARKETSAMOUNT OF LOANSASSET BASEASSET PORTFOLIOASSETSBALANCE OF PAYMENTSBANKING SECTORBANKING SYSTEMBASIS POINTSBONDBOND SPREADSBOND YIELDSBONDSBORROWING COSTSBUDGET DEFICITBUDGET SURPLUSBUSINESS CONFIDENCECAPACITY CONSTRAINTSCAPITAL ACCOUNTCAPITAL FLIGHTCAPITAL FLOWSCAPITAL FORMATIONCAPITAL INFLOWSCAPITAL INVESTMENTCAPITAL OUTFLOWCAPITAL OUTFLOWSCAPITALIZATIONCDSCENTRAL BANKCOMMERCIAL BANKSCOMPETITIVENESSCONSUMER CONFIDENCECONSUMER DEMANDCONSUMER PRICE INDEXCONSUMPTION DECISIONSCONSUMPTION GROWTHCORE INFLATIONCREDIT DEFAULTCREDIT DEFAULT SWAPCREDIT DEFAULT SWAPSCREDIT GROWTHCREDITORSCURRENCYCURRENCY BASKETCURRENCY DEPRECIATIONCURRENCY MARKETSCURRENCY SWAPSCURRENT ACCOUNTCURRENT ACCOUNT BALANCECURRENT ACCOUNT DEFICITDEBT BURDENDEBT BURDENSDEBT PAYMENTSDEBT RATINGDEBT STOCKDEBTSDEPOSITDEPOSIT INSURANCEDEPOSITORSDEPOSITSDEVELOPING COUNTRIESDEVELOPING COUNTRYDISPOSABLE INCOMEDOMESTIC BORROWINGDOMESTIC CREDITDOMESTIC DEMANDECONOMIC DEVELOPMENTSECONOMIC EFFICIENCYECONOMIC POLICIESECONOMIC POLICYECONOMIC SLOWDOWNEFFICIENT MARKETSEMERGING ECONOMIESEMERGING MARKETEMERGING MARKET BONDSEQUIPMENTEURO ZONEEXCHANGE RATEEXCHANGE RATE DYNAMICSEXCHANGE RATE FLEXIBILITYEXPENDITUREEXPENDITURESEXPORT GROWTHEXPORT VOLUMEEXTERNAL DEBTEXTERNAL FINANCINGFEDERAL BUDGETFINANCIAL FLOWSFINANCIAL INTERMEDIATIONFINANCIAL MARKETSFIXED CAPITALFIXED INVESTMENTFLEXIBLE EXCHANGE RATEFLEXIBLE EXCHANGE RATE REGIMEFLOATING EXCHANGE RATEFOREIGN CURRENCYFOREIGN DIRECT INVESTMENTFOREIGN EXCHANGEFOREIGN EXCHANGE MARKETFOREIGN INVESTMENTFOREIGN RESERVESGEOPOLITICAL TENSIONGEOPOLITICAL TENSIONSGLOBAL BONDGLOBAL DEMANDGLOBAL TRADEGOVERNMENT BANKSGOVERNMENT BUDGETGOVERNMENT DEBTGOVERNMENT FINANCESGOVERNMENT SECURITIESGROSS CAPITAL FORMATIONGROSS DOMESTIC PRODUCTGROWTH PERFORMANCEGROWTH RATESHIGH INFLATIONHIGH-INCOME COUNTRIESHOUSEHOLD INCOMEHUMAN CAPITALHUMAN DEVELOPMENTIMPORTIMPORT DEMANDIMPORTSINCOME GROWTHINDEBTEDNESSINFLATIONINFLATION EXPECTATIONINFLATION TARGETINFLATION TARGETINGINSTITUTIONAL CONSTRAINTSINTEREST PAYMENTSINTEREST RATESINTERNATIONAL CAPITALINTERNATIONAL CAPITAL MARKETSINTERNATIONAL FINANCIAL MARKETSINTERNATIONAL MARKETSINTERNATIONAL RESERVESINVENTORIESINVESTMENT ACTIVITIESINVESTMENT CLIMATEINVESTMENT DECISIONSINVESTMENT DEMANDINVESTMENT FUNDINVESTMENT INCOMEINVESTMENT PROJECTSINVESTMENT VEHICLESINVESTOR CONFIDENCEINVESTOR DEMANDLABOR MARKETLABOR MARKETSLENDERLENDER OF LAST RESORTLIQUIDITYLIQUIDITY CONSTRAINTSLLCLONG-TERM INVESTMENTMACROECONOMIC STABILITYMACROECONOMIC STABILIZATIONMARKET CONDITIONSMARKET SHAREMATURITYMONETARY CONDITIONSMONETARY POLICIESMONETARY POLICYMONEY MARKETNATIONAL CURRENCYNATURAL RESOURCENATURAL RESOURCESNON-PERFORMING LOANNON-PERFORMING LOANSNPLOIL DEMANDOIL EXPORTSOIL MARKETSOIL PRICEOIL PRICESOUTTURNPAYMENT DEFAULTPENSIONPENSIONSPOVERTY REDUCTIONPRIVATE INVESTMENTPRIVATE INVESTORSPROFIT MARGINSPUBLIC DEBTPUBLIC FINANCESPUBLIC INVESTMENTPURCHASING POWERPURCHASING POWER PARITYREAL WAGE GROWTHRECESSIONRESERVERESERVE FUNDRESERVESRETURNSECONDARY MARKETSETTLEMENTSHORT-TERM DEBTSLOWDOWNSOVEREIGN BONDSSPARE CAPACITYSTABLE INFLATIONSTATE BANKSSTOCK MARKETSTOCK MARKET PRICESSTOCKSSTRUCTURAL PROBLEMSSTRUCTURAL REFORMSTRUCTURAL REFORMSTAXTAX HIKETOTAL CREDITTOTAL DEBTTRADE BALANCETRADE GROWTHUNCERTAINTYUNEMPLOYMENT RATEUNEMPLOYMENT RATESWORLD TRADE10.1596/20439