What has driven Russia's slowdown?

The raft of Russian activity data for March, due to be released this week, is likely to show a slight improvement from February. But growth in Q1 is still set to be much weaker than at the end of last year. This slowdown has taken policymakers by surprise, with many blaming the weak external backdrop for Russia’s disappointing performance. However, as we show in this month’s Watch, domestic problems appear to be far more important.