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From Jochen Wermuth, Managing Partner, Wermuth Asset Management GmbH

We see the appointment of the new Russian Government as strongly positive for Russia.

Finance Minister Kudrin, rewarded with the prize for “Finance Minister of the year” at IMF and World Bank meetings, was at long last also rewarded in Russia for years of outstanding service, by being promoted to Deputy Prime Minister. He was and remains vital for Russia’s success, by pointing out - like his Chinese colleague and the world’s leading economists - that price stability must be the first priority for economic growth as long-term, low-cost financing is only possible in an environment of relatively stable and low inflation.

At last weekend’s Sochi Economic Forum, his colleagues Minister for Railroads Yakunin and Minster of Transport Levitin had publicly and loudly demonstrated a complete lack of understanding of basic macroeconomics, arguing that oil revenues should be spent immediately on infrastructure projects and that this would actually have deflationary effects – in good old Soviet Central Planning logic - sending shivers down the spines of the economically literate in the audience and highlighting how crucial it has been and will remain for Aleksei Kudrin to stay in control of finances. Russia under Aleksei Kudrin’s has studied and taken on board the lesson’s of the “Dutch disease” and followed the model of Norwegians, not splashing out all of the oil wealth, but saving some of it for the......................

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