Is the Bear Really Stagnating?

Sierra Rayne
Over at The Economist, there are claims that "stagnation seems to be the most apt description of the Russian economy" since "year-on-year GDP growth [was] at just 1.2% last quarter."  Despite Russia's migration up the World Bank's "Doing Business" rankings, The Economist states that "Russia improved more in this year's report than any of its BRICS peers, but it was also the only one to see GDP growth slow significantly."

When it comes to assessing the state of Russia's economy -- particularly compared to other members of the BRICS, we must look a little deeper than total GDP stats.

Russia is the only member of the BRICS to have a declining population.  Last year alone, Russia's population declined by 0.3%.  Compare that to annual population increases of 0.5% in China, 0.8% in Brazil, 1.2% in South Africa, and 1.3% in India.  Over the next five years, Russia's population is expected to decline by nearly 2%.

So what we are really interested in is Russia's per-capita GDP growth rate, and how it is trending relative to the rest of the BRICS.  The latest year with complete data is 2012.  Between 2011 and 2012, Russia's per capita GDP on a purchasing-power-parity (PPP) basis in constant-dollar terms increased 3.0% -- less than China (7.3%), but much more than Brazil (0.0% change; that is actual stagnation), South Africa (1.3%), and India (1.9%).

The IMF is forecasting per-capita GDP-PPP growth in 2013 at 3.2% for Russia, ahead of Brazil (3.1%) and South Africa (2.2%), while India (3.8%) and China (8.5%) lead the pack.  Among the BRCS subset (i.e., no data available for India), Russia's unemployment rate was the only one to fall (from 6.0% to 5.7%) over the past year.

Even Russia's economic development minister -- Alexei Ulyukayev -- is talking up Russia's supposed economic stagnation with public statements such as "[p]ractically, there is no economic development, but the economic-development minister is here in front of you!"

It's clear from the tone of The Economist's article that many want further economic reforms in Russia, and that claims of economic stagnation would help justify these desires.  But with general government gross debt (14% of GDP) and unemployment (<6%) at very low levels and projected by the IMF to stay there, coupled with solid rates of annual per-capita GDP-PPP growth that are predicted to nearly double to >6% per year by 2015/2016, it appears that not everyone is in agreement that the Russian economic bear is stagnating.

Over at The Economist, there are claims that "stagnation seems to be the most apt description of the Russian economy" since "year-on-year GDP growth [was] at just 1.2% last quarter."  Despite Russia's migration up the World Bank's "Doing Business" rankings, The Economist states that "Russia improved more in this year's report than any of its BRICS peers, but it was also the only one to see GDP growth slow significantly."

When it comes to assessing the state of Russia's economy -- particularly compared to other members of the BRICS, we must look a little deeper than total GDP stats.

Russia is the only member of the BRICS to have a declining population.  Last year alone, Russia's population declined by 0.3%.  Compare that to annual population increases of 0.5% in China, 0.8% in Brazil, 1.2% in South Africa, and 1.3% in India.  Over the next five years, Russia's population is expected to decline by nearly 2%.

So what we are really interested in is Russia's per-capita GDP growth rate, and how it is trending relative to the rest of the BRICS.  The latest year with complete data is 2012.  Between 2011 and 2012, Russia's per capita GDP on a purchasing-power-parity (PPP) basis in constant-dollar terms increased 3.0% -- less than China (7.3%), but much more than Brazil (0.0% change; that is actual stagnation), South Africa (1.3%), and India (1.9%).

The IMF is forecasting per-capita GDP-PPP growth in 2013 at 3.2% for Russia, ahead of Brazil (3.1%) and South Africa (2.2%), while India (3.8%) and China (8.5%) lead the pack.  Among the BRCS subset (i.e., no data available for India), Russia's unemployment rate was the only one to fall (from 6.0% to 5.7%) over the past year.

Even Russia's economic development minister -- Alexei Ulyukayev -- is talking up Russia's supposed economic stagnation with public statements such as "[p]ractically, there is no economic development, but the economic-development minister is here in front of you!"

It's clear from the tone of The Economist's article that many want further economic reforms in Russia, and that claims of economic stagnation would help justify these desires.  But with general government gross debt (14% of GDP) and unemployment (<6%) at very low levels and projected by the IMF to stay there, coupled with solid rates of annual per-capita GDP-PPP growth that are predicted to nearly double to >6% per year by 2015/2016, it appears that not everyone is in agreement that the Russian economic bear is stagnating.