The Fire Next Time

Russia’s economy, buoyed for more than two years by high oil prices and strong exports following the ruble’s massive devaluation of 1998, may again be in danger of succumbing to its structural weaknesses. Growth slowed sharply during the first quarter of 2001 and inflation is roaring back. By May, consumer prices were growing at an annual rate of around 25%—twice the government’s target and with no relief in sight. Barely three years after defaulting on its external-debt payments, with foreign investment remaining low and capital flight continuing almost unabated, is Russia heading for another meltdown?