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To be sure, despite the steep drop in oil prices that began three years ago, Russia has managed to escape a deep financial crisis.Barring serious economic and political reform, that bodes ill for Putin's ability to realize his strategic ambitions for Russia.Back in 2012, when Putin appeared onstage with the Nobel laureate economist Paul Krugman at a Moscow bank conference, Russia's 1998 economic crisis seemed a distant memory. So Putin could proudly contrast Russia's government budget surplus with the large recession-driven deficits across the West.The fact that Russia has avoided a financial crisis is remarkable – and largely due to the efforts of the Central Bank of Russia.The shock to the real economy has been severe, with Russia suffering a decline in output in 2015 and 2016 comparable to what the United States experienced during its 2008-2009 financial crisis, with the contraction in GDP totaling about 4 percent.The media tend to over-emphasize this aspect of Russia's economic woes. All countries that rely heavily on energy exports have suffered, especially those, like Russia, that have failed to diversify their economies.
Government debt is not a free lunch
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