Russia Sees Gloom Despite Rise in Oil

Gloomy news about Russia’s economy — figures on Monday showed April industrial production plunged 17% year-on-year — has been mixed with some rare positives in recent weeks. Oil prices are surging, the ruble is up and Russian stocks have taken off.

But even the good news has economists worried. “Oil prices now are as awful as they could be — not low enough to force real reform and not high enough to allow free spending like before,” says Vladimir Mau, a prominent economist who heads an advisory panel to a government team dealing with the financial crisis.

Pressure is high on the government to keep spending to support the flagging economy, while many economists and fiscal hawks inside the regime warn that the Kremlin needs to tighten its belt in order to cut the deficit and bring down surging inflation.
WSJ