Russia’s GDP – Everything Is Known in Comparison

NEW – August 3, 2022

“Contraction accelerates”, “recession intensifies”, “recovery of 2021’s figures is expected only by 2024” – such assessments accompany the results of the Russian economy in the first half of this year. How much do they correspond to reality and how justified are they?

Technically, it is true. According to the Ministry of Economic Development of the Russian Federation, this June the volume of domestic GDP was 4.9% lower than last year, while in May – by 4.3%, and in April – by 3%. In March, year-on-year growth was still observed by 1.6%, in February – by 4.3%, in January – by 5.8%. According to the IMF’s April forecasts, in general, by the results of 2022, the Russian economy is expected to shrink by 6% (in March, the same authoritative structure predicted that our country would fall by as much as 8-10% due to the “hellish sanctions” imposed on it by the collective West).

But, to paraphrase a well-known aphorism, it is important not who will produce how much, but who will calculate and how. And there are a lot of interesting things hidden behind the above figures. For example, in market prices, Russia’s GDP for the first quarter of last year was estimated at 26.771 trillion rubles, and for the first quarter of this year – at 34.692 trillion rubles. Does this mean that our country experienced economic growth of almost 29.6%? No, it doesn’t. Since this indicator is given without adjusting for inflation. And, if to believe Rosstat’s data that for the first quarter of 2022, economic growth as a whole was 3.5%, then the deflator of the economy was approximately 25.2% year-on-year, which is very close to the official inflation figures: 8.39% for 2021 and 16.8% since the beginning of 2022.

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But if we apply the same methodology to the GDP indicator of the Russian Federation in 2021, then its increase in absolute figures from 107.315 to 131.015 trillion rubles with an inflation rate of 8.39% should correspond to an increase not of 4.7%, but of 12.63%, almost three times higher than the official one. Can this be the case? To answer this question, let’s turn to international statistics. IMF data on Russian gross domestic product calculated at purchasing power parity (GDP PPP): 2020 — $4.118 trillion, 2021 – $4.49 trillion, an increase of 9%. Similar World Bank data: 2020 — $4.381 trillion, 2021 – $4.785 trillion, an increase of 9.22%. If we take the nominal GDP calculated at the exchange rate of the national currency to the dollar, the situation will generally look like this: 2020 — $1.48 trillion, 2021 – $1.78 trillion, an increase of 20.27%?!

I emphasise that all this is quite official data, which can be confirmed in the public domain in 15-20 minutes. And here it is given, first of all, to illustrate the thesis that “it is important who calculates and how”. As we can see, we can count very differently. And this is even without taking into account the peculiarities of national methods for determining GDP, for example, the American one, where the total amount includes many “amplifiers”, such as “imputed rent”, i.e. the money that the owner of a room could receive by renting this room to another user, or the “hedonistic index”, i.e. virtual surcharges to the price of higher-quality and “branded” goods and services compared to “basic” ones. Due to such tricks of statistics, the US nominal GDP remains the first in the world, overtaking China by almost $7 trillion, although when calculating GDP, PPP is inferior to China by more than $5 trillion. Thus, the US economy turns out to be “inflated” by more than half, and the same is true for other countries of the collective West, whose currencies correlate with the US dollar.

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If we take into account the real owners of products produced and sold on a particular territory (which any version of GDP indicator in the interests of trans-national companies and Western countries hides, like “Koshchei’s needle”), the picture of the world economy that we are used to will turn out to be just a picture that hides the true state of affairs – like what’s described by A. N. Tolstoy in “The Adventures of Pinocchio” – pictures of the hearth in Papa Carlo’s closet, behind which a secret door was hidden, unlocked only with a “golden key”. And just carrying out a special military operation for the demilitarisation and denazification of Ukraine clearly revealed the “painted” picture — the real “weight” of our country in the world economy turned out to be much, almost an order of magnitude more than it should be from the indicators of its GDP: even nominal, even “parity”.

Only the lazy don’t mention the fact that the “infernal sanctions” hit the sanctioning countries more than Russia, which they were directed against. The recession came not only to Europe, but also to the United States, where it seemed simply impossible. Roughly speaking, because of the sanctions regime, every dollar lost by our country since the beginning of the Second World War means a loss of about a dozen dollars for the United States and its allies — and this cannot continue for any long time. In addition, due to the strengthening of the ruble exchange rate, the nominal GDP of the Russian Federation in 2022 will definitely grow — by a lot. And one of the most important consequences of the departure of Western companies from Russia will be their losses and the real growth of our national economy, as well as the economies of our friendly countries, with the reduction and destruction of the borders of the global “dollar empire”.

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So everything is learned by comparison. And this comparison now, and especially in the future — is not at all in favour of the United States and its allies.

Oleg Shchukin

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