Policy Memos

Exchange Rate Policy After the Currency Crisis: Walking the Tightrope

Policy Memo:


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Although the August 1998 currency crisis came as a surprise to at least some observers, the rapid recovery of the Russian economy after the crisis was even more unexpected. Unlike the experience of East Asian countries, Russia’s economy enjoyed a boom after the currency crisis, not a recession. Output started to grow immediately after the crisis in October 1998, and continues to increase at a high rate for over two years now. In fact, gross domestic product (GDP) grew by 3.2% in 1999 and is expected to increase by an impressive 6 to 7% in 2000, whereas industrial output expanded by 8% in 1999 and will probably grow even faster in 2000 (fig. 1). This is the first period of solid economic growth after nearly a decade-long recession and stagnation (1989-98), and the period of fastest industrial growth since the 1950s.

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About the author

Research Director, Dialogue of Civilizations Research Institute (Berlin); Principal Researcher, Russian Academy of Sciences; Professor Emeritus, New Economic School (Moscow); Adjunct Research Professor, Institute of European and Russian Studies, Carleton
Dialogue of Civilizations Research Institute, Berlin