Putin Decides Low-Growth Russia Could Use Help From Keynes
- Russia pivots to government spending after years of austerity
- With term limit looming, leader drops safety-first economics
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With time running out on his final term as president, Vladimir Putin evidently wants to end it with a boom.
Putin has been a cautious steward of Russia’s $1.7 trillion economy, partly to shield it against blowback from his more adventurous foreign policy. For the last five years, he’s imposed some of the world’s toughest budget austerity. Combined with high interest rates, that’s made Russia a favorite of carry-trade investors –- but it’s left living standards mired at 2012 levels and economic growth stuck below 2%.
Now, the president is changing course –- and channeling an economist whose pro-growth ideas are mainstream almost everywhere else: John Maynard Keynes. Putin just appointed a new cabinet stacked with advocates for more government spending and investment, a Keynesian recipe. And he’s told them to hurry up about it.