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Bleak Despair for the Russian Economy


In a stunning concession, the state-sponsored propaganda outlet Russia Today has reported that Renaissance Capital, the leading Russian broker of equities, has predicted that Russia could enter a recession in 2013.

The reason for this gloomy outlook is clear: Russia’s growth rate has plummeted from 4.3% in 2011 to 3.4% in 2012 to a projected 2.5% this year; but the latter figure is being handed out by the Russian government itself, and is clearly self-serving.  Renaissance Capital doesn’t find it convincing, and believes that Russia could slip into negative territory before the year is out.

That’s because Russian growth in the first quarter of this year was just 1.4% and this fell to a mere 1% in the second quarter. If this pattern continues through the end of the year, Russia will be flirting with or in recession.

A second stunning admission came from another state-sponsored propaganda outlet, Russia Beyond the Headlines.  It reported:  “Energy prices were the only reason why Russia avoided a recession trough. Despite all the promises, or, to use the government’s rhetoric, ‘strategic plans’ to reduce oil sales proceeds to 5.6 percent of GDP, its share is still at least double that.”

And the Financial Times completes the picture, noting that even 4.3% growth is far below the level promised by the Kremlin, namely 5%.  So even according to its own data, in the best case scenario the Kremlin will be at a level of economic progress by the end of this that is half what it targeted. In the worst-case scenario, Russia will be mired in catastrophic recession.

And the only thing that will stop recession will be oil prices over which Russia has absolutely no control. That is, Russia’s economic fate is held in the hands of foreigners, not Russian hands.

And the reason for all this is simple:  Vladimir Putin.  Putin has totally failed to wean Russia off what Dmitri Rogozin has called the “needle” of fossil fuel dependence, and he has failed to generate significant growth in any other major sector of the economy. In fact, many areas are a major drag on Russian growth.

The dramatically straight black line shown in the graph above depicts the Russian GDP rate in freefall, descending at the constant rate of nearly 1 point per year. That’s a 20% loss in growth from 2011 to 2012 and a 25% loss from last year to this one.  Even under the government’s own projection, based on this trend next year would be even worse, with growth well under 2%, and recession would be inevitable, particularly if world oil prices decline. If the latter happened severely enough, Russia would instantly head into a major depression.

If not one but two Russian propaganda outlets are willing to admit things are this bad, do you dare imagine how bad they really are?

24 responses to “Bleak Despair for the Russian Economy

  1. This Russia Today article predicts awful catastrophes for Russia. For example:

    > A year-on-year comparison however shows the Russia economy will have grown by 1.4% in Q1 and by 1% in the Q2.
    > According to World Bank forecast in 2013 Russian GDP will add 3.3% and in 2014 the Russian economy will grow by 3.6%.

    That’s almost as horrible as the predictions for the US:

    Gross Raises U.S. Economic Growth Forecast to 3% in 2013
    By Alexis Leondis – Mar 8, 2013 11:28 AM PT

    Will Russians survive a measly 3.3% and a 3.6% growth in 2013 and 2014?! or will millions of Russians run away to China?

    China Faces Economic Meltdown in 2013, Says State Researcher
    By Gao Zitan
    Epoch Times Staff

    • larussophobe ⋅

      “3.6% growth in 2013” — Um, no. It’s 2.5% growth in 2013 according to the Kremlin’s own predictions, you illiterate goat. And according to the experts at Renaissance Capital, maybe recession.

      Meanwhile, Here’s a little math for you, idiot.

      At 3% growth the $15 trillion US economy produces $500 billion in new wealth, or $1,500 in additional wealth for each American.

      At 3% growth, the $2 trillion Russian economy produces a mere $60 billion in new wealth, or $400 in additional wealth for each Russian.

      In other words, the same growth rate produces NEARLY FOUR TIMES more wealth for an American compared to a Russian. In other other words, the US growth rate could be HALF what Russia’s is and still produce VASTLY more wealth for each American.

      Oh and, by the way, if the American economy performs badly that will have dire consequences on the price of oil, which will wreck the Russian economy, slave to the price of oil. Do you think AT ALL before you write things other people can see?

      Meanwhile, you’ve COMPLETELY IGNORED the main point of this post, namely Renaissance Capital’s concern that Russia is headed for RECESSION. You’ve also ignored that the information we cite to was published BY THE RUSSIAN GOVERNMENT ITSELF. In fact, you’ve misstated the data, and then posted a link (which we’ve deleted) to the disgraced and failed eXile blog which has NOTHING to do with Renaissance Capital. The fact that you think the eXile is a credible source of information about economics shows how utterly ridiculous you are. Comparing those failed losers to actual stock brokers (whose self-interest is in PROMOTING the Russian economy, not trashing it) obliterates your credibility.

      As for the article by Mr. Zitan (which you didn’t even manage to link to in your frenzy of thoughtless verbal diarrhea), wouldn’t it be better to wait until 2013 is over before you libel him and his source? Or alternatively, at least acknowledge that he’s not alone? If it’s your advice that China should ignore an array of reports indicating financial jeopardy including those from within the state itself, you are a psychopath.

      And by the way, the topic is Russia not China or the USA. You offer NOT ONE SINGLE SHRED of information showing the strength of the Russian economy. You just offer classic Soviet “whataboutism” of the same type that drove the USSR into its grave. By the way, who predicted THAT? You?

      Better to remain silent and be thought a fool than speak up and remove all doubt.

      • > As for the article by Mr. Zitan (which you didn’t even manage to link to in your frenzy of thoughtless verbal diarrhea)

        Unfortunately, the owner of your blog (wouldn’t that be you?) has foolishly set a tight limit on the number of URL address per comment. Otherwise, the comment goes to moderation by you, and you never publish it. That’s why I intentionally give titles and authors instead of URLs, so that the readers, familiar with web search, can look them up. BTW, web search is not as difficult as you think, Kim.

      • Kim wrote:

        >As for the article by Mr. Zitan, wouldn’t it be better to wait until 2013 is over before you libel him and his source? Or alternatively, at least acknowledge that he’s not alone?

        I don’t think you understood what I wrote. My point is that I agree with what Mr. Zitan has written: the Chinese economic crisis is inescapable.

  2. [comment deleted]

    The next time you try to advertise on our blog you’ll be banned for life.

  3. siber_troll ⋅

    one of the Putin’s laws unacceptable for russians

  4. siber_troll ⋅
    protest against residency registration. one of slogans “Putin will be executed”

  5. An interesting article in the late Exile:

    Press Review: The Economist’s Three Stooges

    I’d like to make a small contribution by reviewing the work of three Moscow correspondents for The Economist over the last ten years. Of course, its Russian coverage is far from the only of magazine’s bloopers. The list is long. There’s the famous March 1999 cover story predicting an “endless era of cheap oil,” which appeared the same week that oil prices began their steady ascent from the lowest point in a quarter century. Perfect timing! Then there were The Economist’s strident editorials in favor of Bush’s invasion of Iraq in 2003.

    First up is Edward Lucas, the Moscow correspondent who in the annual glossy “The World in 1999″ issue, issued this prediction for Russia, at once gloating and apocalyptic:

    “1999 will be the year of Russia’s disintegration… Trade between Russia’s regions will plunge at least until they hit on a stable, trusted currency in which to do business. That is hardly likely to be the rouble, and the planned coupons and currencies which some regions have been planning look equally unattractive substitutes… foreign invasion, albeit of a peaceful and benevolent kind, is exactly what Russia’s regions should want… The probable decline in Russia’s wealth in 1999 will be around 10%… expect yet another bleak and miserable year”.
    How would you like your crow pie served, Mr. Lucas?

    • larussophobe ⋅

      What does this have to do with Renaissance Capital, Russia Today or Russia Beyond the Headlines? Please stop spamming our blog with total gibberish and trash.

      • Kim, this is an example illustrating that you shouldn’t blindly trust every single doom-and-gloom-for-Russia prediction that you see, especially when the boys at Renaissance Capital, in their prediction, are contradicted by men from the World Bank.

        • larussophobe ⋅

          In other words it has NOTHING to do with the topic of this post. SPAM our blog once more, and your banned you idiot.

  6. I was sorry to hear that you consider posts about the unreliability of predictions about Russia’s future when discussing predictions about Russia’s future, to have “NOTHING to do with the topic of this post“.

    > SPAM our blog once more, and your banned you idiot.

    I understand your situation. I will not discuss predictions on your blog again.

    > How can you agree with him when you believe all such predictions are unreliable?

    How can I answer your question about predictions without you banning me and/or deleting my reply?

  7. Minsky ⋅

    A question for the Putinists who for some reason comment here: why, in the face of a shrinking economy, isn’t Putin taking steps to show the world that Russia is becoming safer for investment? for example, by taking steps to show the courts are less corrupt and more independent? or that the place is hospitable for foreigners who wish to put their capital there?

    instead, he’s got the courts ignoring the Magnitsky travesty, confirming Khodorkovsky’s conviction, denying the Pussy Riot appeal, and generally just confirming to the world that Russian institutions cannot be trusted.

    • Manfred Steifschwanz ⋅

      Easy enough, Minsky:

      You’re equating “the world” to “the West”. Again: Anti-Americanism combined with national pride is exactly what’s boosting Putin’s and Russia’s popularity and prestige in (the real) world. Also, given the formidable performance of the West’s bankster cabal resorting as of late to outright, undisguised theft of people’s savings, Putin can just sit back and relax with a big smile upon his face. The barking and yapping of the Russophobes is just pure Corporate Media horseshit.

      • dolly538 ⋅

        Russians are psychologically destroyed because they lost the Cold War. So they spend their time dreaming of somehow defeating the free world. This is of course futile because Russia is a Third World country.

        • Manfred Steifschwanz ⋅

          Fair enough, but if so — then this blog INDEED looks silly beyond laughable. Western supremacists are beyond redemption and below contempt, as is quite clear from Ming, Bohdan, MCCUSA, and yourself. Psychologically destroyed indeed.

    • Answer: Putin and his team are more interested in their own wealth and power than those of the people.

  8. Pingback: Teflon Putin, by the Numbers | Dying Russia

  9. Pingback: Recession in Russia! You Read it Here First! | Dying Russia

  10. Pingback: Putinomics: Stagflation Hits Russia - Cracking the New World Order

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