The Kremlin called it unrealistic a month ago, but now Putin’s advisers say Russia is one of the world’s top-five major economies
The Kremlin ditched it as a national development goal just a month ago, but Vladimir Putin’s advisers now say Russia is one of the world’s top-five major economies. On Monday, August 31, presidential adviser and former Economic Development Minister Maxim Oreshkin announced the good news: “If you open up the latest IMF forecast for this year, you’ll see that Russia will be the fifth economy in the world — that it’s rising to this level. From this perspective, we can say that [the goal] has been achieved.”
The IMF’s 2020 forecast, published in April, does indeed state that Russia will be in fifth place globally in terms of GDP at purchasing power parity for domestic goods and services, after China, the U.S., India, and Japan, slightly ahead of Germany. Russia owes its high ranking to the relatively low prices on many nontradeable goods and services (available only domestically), such as public utilities and real estate. In other words, for the same amount of dollars or euros, you can buy or produce more of these things in Russia than in the West.
In terms of nominal GDP, which measures the size of a country’s economy without regard to local prices on goods and services, Russia ranks a more humble 11th place globally.
Oreshkin attributes Russia’s higher economic ranking to the country’s supposed faster recovery from the crisis caused by the coronavirus pandemic. According to the IMF’s most recent forecast, released in June, Russia’s economic contraction in 2020 is expected to be 1.2 percentage points less than Germany’s slowdown. Roughly the same gap exists in economic forecasts released by economic officials in Russia and Germany.
“From there, the fulfillment and achievement of robust economic growth above global averages will allow us to remain in this group,” said Oreshkin, who now serves as a presidential adviser.
In late July, when Vladimir Putin signed an executive order on Russia’s national development goals for the next decade, observers noticed immediately that the Kremlin had abandoned the aim of becoming one of the world’s top-five major economies. At the time, citing the coronavirus pandemic, Putin’s press secretary, Dmitry Peskov, told reporters that the goal was unrealistic.
“Of course, this unfavorable global economic situation will slow down the development of all countries around the world, without exception,” Peskov told journalists, stressing that Russia’s development goals need to be “realistic and achievable.”
Text by Grigory Levchenko
Translation by Kevin Rothrock