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Russia sees brighter future ahead with Trump at helm

Russian President Vladimir Putin takes a glass of champagne during the reception for new foreign ambassadors at Grand Kremlin Palace in Moscow, Russia, on November 9, 2016.
Mikhail Svetlov | Getty Images
Russian President Vladimir Putin takes a glass of champagne during the reception for new foreign ambassadors at Grand Kremlin Palace in Moscow, Russia, on November 9, 2016.

Russia has been highlighted as one of the big winners of Donald Trump's election victory largely due to the Republican president-elect's warm tone towards President Vladimir Putin during the campaign.

Indeed, certain key voices within the world's largest nation, such as the Russian President Vladimir Putin himself, have seen the election outcome as positive for the country.

An official statement from the Kremlin paraphrasing a telegram sent from Putin to Trump spoke to the Russian leader's optimistic view.

"Putin expressed hope for joint work to restore Russian-American relations from their state of crisis, and also to address pressing international issues and search for effective responses to challenges concerning global security," the statement said.

Kirill Dmitriev, chief executive officer of RDIF, Russia's sovereign wealth fund, highlighted the idea that the economic and political benefits would be felt more widely than within his homeland.

In an email to CNBC, Dmitriev said "We believe that election of President Trump will be positive not only for the Russian market but that worldwide markets will restore quickly and will the appreciate pragmatic, growth oriented approach of President Trump."

"Trump's focus on win-win solutions, ability to rethink old dogmas and create proper incentives for growth, cooperation and prosperity will be positive for the world economy," he continued.

Furthermore, Dmitriev sees upside for the global economy and business as a result of the election of the U.S.'s new leader.

"Trump's business background will lead to greater efficiency of U.S. economy and institutions to focus on job creation and better cooperation with other nations through a more pragmatic and honest approach."

Charles Robertson, global chief economist at emerging markets investment bank Renaissance Capital, also sees upside potential for Russia's economy, despite a possible short-term hitch.

According to Robertson in an email to CNBC, "Trump has been keen to promote U.S. commodity production, such as coal, so we imagine in the longer-term his election will constrain an increase in commodity prices."

"But in the shorter to medium-term, the possible removal of sanctions will enable Russia to invest more and grow faster. Global investors have been surprised by the improvement in Russia's economy this year (it shrank by around 0.5 percent while many thought it would shrink 2 percent) and we think growth will be closer to 2 percent in 2017 than the 1 percent assumed by consensus," he added.

Upside constrained

Yet despite the positive reading of the election result for Russia, the country still faces a raft of challenges stemming from longer-term issues blighting its economy such as the effect of sanctions and struggling commodity prices. It is therefore far from certain that the ascendancy of Trump to the White House as of January 2017 will be able to influence Russia's fortunes as much as some commentators anticipate.

Chris Weafer, co-founder of Eurasian consultancy Macro Advisory, says while a Trump victory may be good news for the country overall, its capacity to change the situation too much for Russia is constrained.

In emailed comments to CNBC, Weafer said, "While a Trump presidency can be expected to lead to less confrontational rhetoric between Moscow and Washington, that will only reduce one of the reasons why investors are wary of Russia. Russia still needs to make itself attractive for investors and that means improving the business and investment climate."

"A Trump presidency is not a magic bullet for Russia's economic problems," he cautioned.

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