Russia’s recession is over but that doesn't mean the standards of living are improving or the people feel any more confident about the future.

Economic growth was about 1% in the first quarter but the full year forecast is for only 1.5%, although some forecasters says it could be higher.

The country has been bolstered by better than expected oil prices of about $50, the main impact of which is the Ministry of Finance crisis over how to finance the deficit has evaporated. The government is still expecting to run a federal budget deficit this year, but size has now fallen to the point where this can be entirely financed by domestic bond issues plus a little international borrowing.

On the ground manufacturing is growing again and investment is up a little. For consumers real incomes continue to rise and retail sales were flat in May for the first time in nearly two years. However, the population is still suffering as the more important real disposable income remains in the red, albeit with the decline slowing.

In the short-term the macro situation has stabilised and returned to modest growth. That has bought the government some breathing space and in May president Vladimir Putin received three different version of a reform and economic recovery plan, which he is considering now.

The main difference between them is either to focus on improving productivity and investing in infrastructure or borrow heavily and spending on state companies to stimulate the economy. Putin has not decided yet, but the form of the plan eventually chosen will set the tone for years to come.
 
The economic revival will be welcomed by the Kremlin as it faces presidential elections next year -- theoretically Putin’s last term in office -- which will dominate both the political and economic agenda.