Russian Economy Soaring Higher Than Reported

Prime Minister Mishustin revealed new updated statistics on Russian economic performance for 2023 and 2024 along with the news that real wage growth stayed well ahead of the rate of inflation that Putin warmly welcomed. When the numbers are broken down, they reveal the sectors that benefitted most from the illegal sanctions war. But as usual, there’s more to be done to keep the economic engine in tune, and some of those points were mentioned too. Now Mishustin will tell you himself:

Vladimir Putin: Mikhail Vladimirovich, please.

Mikhail : Dear Vladimir Vladimirovich, I would like to report to you about the situation in the economy and the results of last year in more detail. I reported to you last night that we received data from Rosstat…

Vladimir Putin: Recently, you and your colleagues from the economic block were engaged in an assessment of the current economic situation. I know you have the latest data, right?

Mikhail Mishustin: Yes, Rosstat has just presented their first assessment. According to it, the Russian gross domestic product grew by 4.1 percent, that is, by 0.2 percent more than what was in the official forecast, which is higher than expected. In December, we achieved a 4.5 percent growth rate. Here, the GDP deflator index for last year was 8.9 percent. Slightly lower than we predicted, by 0.3 percent.

And as a result of the clarification, we got the nominal size of GDP, which is the historical maximum in the country – 200 trillion rubles for 2024. First of all, due to the intensive growth of the manufacturing industry. In general, our industrial production increased by 4.6 percent, which is better than all preliminary estimates.

Rosstat also clarified the data for the previous three years. Our third estimate was GDP for 2023: there is an increase of half a percent, that is, not 3.6 percent, but, accordingly, also 4.1 percent of GDP growth was recorded in 2023 in the country. This is due to the fact that it was necessary to receive annual reports from businesses, a more complete picture of economic sectors, and accounting reports for state and budget institutions.

Dear Mr Putin, you said that we met quite recently, but you have held a huge number of industry meetings, drawing our attention to specific issues and tasks, industry-specific tasks. As a result, we have prepared a number of measures and implemented them. Experts and scientific communities were involved in this process. But the most important thing is the work of our business and people, thanks to which the economy has been demonstrating fairly steady and dynamic growth for the second year.

Here we can say that the country's economy has successfully coped with unprecedented sanctions pressure – unlike many countries that imposed sanctions against us themselves. In some cases, the situation there is close to stagnation: you are well-versed in who has what.

If we talk about the reasons for the growth: our growth was supported by high investment and consumer activity. Manufacturing industries have become the driving force, and we always talk about this: they have added 8.5 percent. Also, everything was initially predicted to be much lower. But this is an area that, as you know, both you and the Government pay special attention to. There, the share of added value is much higher than when selling raw materials. And current statistics confirm that such efforts are already yielding results.

The economy is becoming more technologically advanced and diversified, and this, accordingly, begins to have a more favorable impact on macroeconomic stability and conditions in general. This means that it will allow us to solve medium-and long-term tasks more confidently.

I would like to say a few more words about what became the driver, if I may.

Vladimir Putin: Of course.

Mikhail Mishustin: The sectors that are focused on domestic demand performed better than others, although export-oriented ones showed a slight decline. It is not so big-minus 0.4 percent, but in general it was so minimal for the year.

The main contribution to the dynamics of manufacturing industries–-what became the driver-–was made by the machine-building complex. It provided about 40 percent of the total output growth. At the same time, it increased production by almost 20 percent, or 19.5 percent to be exact. Transport engineering, 29.6 percent; auto industry, 16.5 percent; production of computer and electronic equipment, 28.8 percent; as well as medicines, 18 percent growth, showed double-digit rates.

Our fuel and energy complex continues its adaptation period. Companies are looking for new partners and developing promising markets. You also know in detail what is happening there, but this requires more time and effort. But at the end of the year, we managed to minimize the decline, in the mining sector it was less than one percent: minus 0.9. At the same time, production, for example, in the field of providing electricity, gas, steam, on the contrary, increased by two percent.

These are probably not bad results, but, of course, it is absolutely clear that the main challenge is inflation – it was 9.52 [percent] for the year. It is growing slightly, but the aggregate monetary policy measures taken today have already begun to slow down lending to the economy. You also know this, as we reported to you: the annual rate has declined for the sixth consecutive month. The same trend applies to lending to both individuals and businesses. This creates the necessary prerequisites for lower prices, but it can inevitably lead to a slowdown in the economy.

Therefore, our first task here is to work with the Bank of Russia to adopt a very responsible fiscal and macroeconomic policy. The economy may not grow so significantly next year, but it is very important to stop inflation and do everything–-as you also said at our meetings—to ensure absolutely clear long-term economic growth based on, let's say, a stable macroeconomic situation.

Just two words–-this is very important--for real money income. Because it was very important–-and you always say this–-to ensure, first of all, an increase in the real monetary income of the population. And here there is a result, it is quite high. In our country, the real monetary income of the population increased by 8.4 percent, which exceeded the forecast. And the real salary, now for 11 months, is plus 8.7 percent. That is, it is already on top, that is, it really means that people received more–- here inflation could not, let's say, reduce the income of the population.

Probably another important indicator is the unemployment rate. On average, it did not exceed 2.5 percent per year, and now it is 2.3 percent. We are actively working on this, creating opportunities to attract personnel to those industries that need them.

Mr President, last year the foundation was laid for moving forward in the country's development. The most important thing is to fulfill all social obligations–-you always do when you assign them, we do it first of all—and to fulfill the national development goals that you have set for us, to ensure the country's technological, industrial and economic sovereignty. We will continue to do this actively.

And I hope that all the tasks that you have set will be fulfilled.

Vladimir Putin: Mikhail Vladimirovich, our economic growth rates were not only higher than our own forecasts, but also higher than the world's and higher than similar indicators in the so-called developed economies. As far as I can see from official statistics, the United States is 2.8 percent, which is generally a good indicator. In the euro area, of course, everything is more modest: in France – now I'm talking about the leading European economies-growth is 1.1 percent, and in the Federal Republic of Germany, in general, minus 0.2 percent. Well, these are their problems, we know what they are related to. This isn't about them, it's about us.

I think that the result you have just mentioned is, of course, primarily the result of the work of labor collectives, the business community and, of course, the Government, financial authorities in the broad sense of the word. And, I repeat, this result is satisfactory, a good result.

The goal for the current year is to achieve a balanced growth trajectory and reduce inflation. You also mentioned this just now: we have an annual [inflation rate] of 9.5 percent, and I think it was already 9.9 percent year-on-year as of February 3. And this is a challenge for us, and we must do everything necessary to ensure that our growth is balanced.

But, of course, the growth trajectory should be maintained even if the economic growth rate is adjusted due to the circumstances that you just mentioned. This is absolutely normal, of course, we have discussed this with you and our colleagues many times.

I would like to draw your attention to something else. During the period of combating the consequences of the coronavirus epidemic, the Government worked very hard and effectively in various industries. We have already discussed this, including at a meeting with the business community, and our colleagues are asking for it, and we have agreed with the Government that this work will be restored in all sectors. It is necessary to understand the prospects of individual industries, priorities and provide effective support in the necessary areas. I repeat once again: as it was possible to do during the fight against coronavirus. Appropriate decisions should be made, assessing the long-term prospects for the most important areas of activity.

I think that one of the most important areas is the development of the supply-side economy. We need to change the structure of this growth. I have already said that it is important to create new enterprises and new jobs everywhere, in all regions of our country. And work at these enterprises, of course, should be based on modern management principles, and on a new technological base, as you yourself say all the time, and with the use of robotics, and with the use of artificial intelligence, and all the other achievements that exist in our country and in the world. We need to take the best from everywhere and use it to increase labor productivity. This is the key task for us in the near future.

And, of course, as we agreed, I am waiting for the Government to come up with a plan of measures to promote structural changes in the economy. On this basis, I am confident that we will achieve, as I said, balanced growth and the quality of this growth in the near and medium term.

But in general, the result is good, I repeat once again. I hope that we will maintain not only the economic growth rates that we need, even if they are adjusted. But most importantly, we will do everything necessary to ensure that the structure of our economy changes and that this balanced growth, which I have mentioned, is sustainable.

Thank you.

Mikhail Mishustin: Thank you, Vladimir Vladimirovich. We will proceed from this. [My Emphasis]

This report supplies further egg for the faces of several well-known anti-Putin analysts and additional reasons to ignore them. The West’s emphasis on attacking Russian exports has proven to be grossly incorrect just as thinking Russians incapable of designing products for their own internal market has shown how powerful Russophobia was in causing such thinking. Those with open eyes and unbiased brains see clear Russian superiority in arms, rocketry, energy systems, all areas of science and continued excellence in arts, sport and culture. Yes, the many needed infrastructure improvements have played a big factor in Russia’s economic success, and its internal market can absorb the same level of improvements for several more years—and those improvements are separate from the Arctic and Far East development plans which will add their own inputs to Russian economic growth. In two more years or so, Russia will be bigger, have a greater population and need to develop vast newly reclaimed Russian regions that will further drive its economic growth, and that of the entire EAEU and CIS. And portions of Europe will also reestablish commercial relations or broaden them once the SMO is over. The attempt by the Outlaw US Empire to neuter Russian economic growth via sanctions and kinetic war has utterly failed as all that did was boost Russia’s development of its internal economic production to service its own internal market and those of its allies. IMO, Russia should be grateful for the amazing level of ignorance shown by the West about all things Russian. Given what IMO is an artificial ruble/dollar exchange rate that’s currently 90:1, Russian 200 Trillion ruble GDP only equates to $2.225 Trillion, which IMO is grossly incorrect. What it actually is probably doesn’t matter at the moment as Russia’s rising on a daily basis. And that’s clearly the result of all Russian’s working together to advance themselves—what a concept!

*
*
*
Like what you’ve been reading at Karlof1’s Substack? Then please consider subscribing and choosing to make a monthly/yearly pledge to enable my efforts in this challenging realm. Thank You!