Russia’s economy is coming out of its recession and picking up momentum. The firs quarter growth of 0.4% was meager, but the acceleration to 1.4% in May and 3.4% in June was more encouraging.

At the same two key metrics went into the black after years of decline: real disposable income and construction both went positive in the 1Q17 showing that both consumption and investment have returned, albeit modestly, as economic drivers.

Now one is expecting a boom, but steady growth capped at about 2% is now on the cards – and it will be more if there are deep reforms, but those are unlikely until after the presidential elections (and the World Cup) in 2018.

On the negative side of the leger inflation ticked up to 4.3% following a spike in fruit and veg prices caused by really bad weather in May. Agriculture was the only sector to grow last year, but this year it has contracted by 0.9%. Still, Russia is on course for a decent harvest of about 100mn tonnes of grain, less than 2016 record harvest of 119mn tonnes, but still good.

With inflation above 4% the Central Bank of Russia (CBR) has been aiming for and it kept rates on hold in July at 9% rather than continuing a three month long cutting spree.

The high rates is smothering the economic growth and corporate lending is falling as a result as companies return quietly to international capital markets where the money is longer and cheaper. However, retail loans have started to grow again, fuelling hopes of some consumer lead growth and banks have returned to profit.

The politics remains bad and has gotten worse. The US slapped new “unbreakable” sanctions on Russia in July that will take a law to remove, rather than a Trump fiat and so are likely to be there for decades. However, the same sanctions caused the Germans to call “unfair” as their business interests are caught up in the same sanctions and all pretense of unity in the face of Russian aggression in Ukraine has crumbled.

All-in-all the pace of Russia’s growth will be hobbled by the new sanctions so it will grow but at under potential.