While the timing and extent of the global financial crisis surprised many countries, Russia was generally prepared. Its macroeconomic management of the recession rightly earned accolades from several international organizations.

But Moscow’s industrial and social policy responses were not as praiseworthy, representing yet another victory of political tactics over economic strategy. Although Russia’s leaders saw the crisis as vindicating their past policies—including the reform strategies they devised from 2006–2008—most of the structural issues in Russia’s economy remain, with solutions likely delayed for several years. Russia’s fiscal decline— from an average of 7 percent annual growth before the crisis to a loss of 7.9 percent GDP in 2009—is the highest figure among G20 countries.

Russia’s economy in the near term will largely depend on oil prices and how Moscow handles the country’s demographic challenges. But the economy’s medium-to-long-term outlook will be influenced by the lessons that leaders take from the crisis, which will affect Russia’s economic structure and policies for many years to come.