Putin up with him

Fears of a new cold war with Russia have not been fully realised, even if relations remain strained. Europe is likely to become more accommodating once Nord Stream II becomes operational. Even Ukraine is likely to move towards some sort of rapprochement. Meanwhile, Putin is pursuing a reformist domestic economic agenda. This should not only improve fiscal sustainability but also the supply-side of the economy, raising the potential trend growth rate. Alongside credible monetary policy, the longer-term macro outlook looks more positive.

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