Numbers about Russia’s economy

Numbers about Russia’s economy

Based on the data, Russia’s economy is projected to shrink by about 2 percent in 2022 — a low drop that would suggest a mild recession. This figure entered the policy debate: for some, this low figure is a sign that the Russian economy is stable and that the sanctions imposed by the countries are not working. Others think that Western sanctions should be redoubled and pressure increased. These conflicting arguments have one thing in common: they rely on largely unsubstantiated numbers.

Even if Russia’s reported GDP decline were to be true, it is clear that several factors artificially inflated Russia’s economic growth in 2022. First, the turbo-engined production of Russian military equipment boosted the economic growth indicator. However, the production of tanks and military equipment does not improve the standard of living, and this part of Russia’s GDP will soon disappear on the battlefield. Russia’s export earnings rose in 2022 due to war-induced energy price increases.

More important than what Russia’s rise means is that Kremlin officials cannot be trusted.

Recent weeks provide a good example of this strategy in real life. In January, the International Monetary Fund released an analysis of Russia’s 2022 recession as part of its World Economic Outlook. In 2022, the Russian economy shrank by 2.23 percent. These data surprised many analysts, especially because the IMF was previously more pessimistic about Russia’s economic situation.

The second reason for Russia’s disinformation is the increased timing of the publication of low data. This is exactly what happened shortly after the release of the optimistic IMF number when Russia’s State Statistics Service suddenly delayed the release of real GDP statistics.

Analyzing the effectiveness of sanctions has always been difficult. The Kremlin has classified all available statistics since the start of the war, including foreign trade, which provides information on the current state of Russia’s energy sector. The Russian president hopes that turning Russia into a black box will help his claims that the sanctions are not working, confusing Western politicians and citizens.

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