Higher world oil prices have been the brightest spot of all. Rising oil revenues and devalued domestic costs have combined to improve the outlook for 1999 in much the same way that low oil prices and the Asian currency crisis came together last year to spark the Russian collapse. Those seeking more justification for the surge in stocks can point to a host of other reasons. Industrial output in May rose 6.1 percent from a year before, while monthly inflation has fallen. President Boris Yeltsin has returned to a semblance of health.
Creditors are likely to ease the country's debt burden.
And the International Monetary Fund has agreed to renew lending, even though no loans have been made. All in all, Russian stocks look cheap again, thanks to devaluation. But the biggest reason for the sudden change may be that Russia's shrunken economy may now be more susceptible than ever to big changes in dollar-denominated exports like oil. While oil prices have nearly doubled since February, Russia's prospects may be affected more dramatically than in previous years because its economy is only about half as large as it was a decade ago. In dollar terms, Russia's gross domestic product last year was only 84 percent larger than Poland's, although it has more than three times the population and 50 times more land.