In 1999, the year before Vladimir Putin ascended to the Russian presidency and the final year of rule by Boris Yeltsin, the Russian economy snapped out of its doldrums and posted impressive growth of 6.4%. The next year, before Putin’s policies could possibly have had any effect, it soared to 10%.
It’s an absolute lie that the Putin economy then took flight and saved Russia from the ravages of Yeltsin. Under Putin, the average rate of GDP growth has been just 5.1%, considerably less than what Russia enjoyed inYeltsin’s final year, and as Anders Aslund points out in the Moscow Times Putin isn’t responsible for the growth that occurred on his watch. That growth began under Yeltsin, not Putin, and it was the result of rising world oil prices due to a global economic boom. In the period when Russia’s GDP growth spiked under Putin, 2003-2007, the price of a barrel of crude oil doubled, from $30 per barrel to $60 per barrel. Nothing remotely that dramatic happened under Yeltsin. In 2009, when the Russian economy collapsed, the price oil fell by half, from $100/barrel to $50/barrel.
When oil prices tumbled in 2009 due to a global economic downturn, Russia saw a massive recession in which GDP constricted by a whopping 7.5%. As shown in the graph above, in 2001, the first year when Putin’s policies could credibly be said to have come into force, economic growth fell dramatically. It wasn’t until 2003, when the price of oil soared upwards, that growth exceeded Yeltsin’s 1999 pace, and in only four of Putin’s 12 years in power so far has it done so. In ever other year, Putin’s economy lagged behind Yeltsin’s benchmark, sometimes dramatically so. Russia’s current GDP growth rate is half what it was at the end of Yeltsin’s rule.
Even if you delete 2009 from Putin’s record and consider only the other years, Putin’s average rate of economic growth is just 6.2% per year, still clearly less than what Yeltsin achieved ten years earlier. As the chart indicates, seven times during the Putin years economic growth has fallen from year to year, while only five times has it risen from year to year.
But you can’t take away 2009. In that year, Russia paid the price for ten years of rule in which Putin failed to ween the nation off its dependence on crude oil and engaged in profligate waste of Russian resources by restarting the cold war and initiating a massive military buildup.
Russia is being egregiously harmed by the rule of Vladimir Putin, not helped. Under Putin, economic growth has been minimized rather than maximized, and the chance to alter Russia’s future has been squandered rather than exploited.
Since 2009, Russian economic growth has never exceeded 4.5% It fell dramatically in 2012 compared to 2011, and it has fallen again the first two quarters of 2013. As we’ve previously reported, even officials of the Putin administration itself now admit Russia is mired in yet another recession.
And all of this is perfectly predictable. Putin is not an economist or businessman, he is a proud career KGB spy. He knows nothing about how to run an economy or a business, he was educated in the Soviet Union and taught only how to hate, lie and destroy.