The supply-side of the Russian economy is proving far more resilient than many expected.

So says from Jan Dehn, head of research at Ashmore Investment Management, based in London. Dehn writes today that low oil prices, and sanctions from the United States and Europe following Russia’s annexation of Crimea, have had an effect. But the impact is less than anticipated. He writes:

 “Industrial production rose in March by a modest 0.4%, but this was still far stronger than the consensus expectation of a decline. Meanwhile, demand side indicators are going through the necessary adjustment with investment, real wages and retail sales softening materially in March. This is exactly what needs to happen in order for the Russian economy to adjust to the external shock of lower oil prices. In that context, the fact that weekly inflation is now showing clear signs of slowing is very positive, because it allows the central bank to enact material rate cuts over the course of 2015. Another positive sign is that retail deposits are now recovering, which suggests that Russians believe the ruble is now a good place to park savings again.”