The 2008 version of the CIA World Factbook has been published. While the demographic data has not been updated, new economic estimates have been published for 2007.
Firstly, let’s take a look at the basics. Russia’s GDP is now estimated at 2076bn $ in 2007, up from 1723bn $ in 2006. This is not just because of Russia’s 7.4% growth and dollar depreciation, but because estimates for it have been revised upwards – apparently it has taken a hint from the World Bank, which has used new data on international price comparisons to slightly improve Russia’s position and massively downgrade (by 40%) China and India.
This also means that in purchasing power parity terms, Russia’s GDP is now the seventh largest in the world, moving up two places since 2006 by overtaking Italy and France. Now, it is within shooting distance of the UK (2147bn $). Assuming, like the Economist Intelligence Unit, that Russia will grow by 6.7% and Britain by 1.9% in 2008, this means Russia will overtake Britain in 2008. Assuming a conservative 6% Russian growth and 2% German growth, Russia should overtake Germany in 9 years from 2007 (in 2016), thus fulfilling predictions that it will become the world’s fifth largest economy by 2020 some four years earlier. It also means Russia’s PPP GDP as a percentage of the world’s increased from 2.65% in 2006 to 3.15% in 2007. All this is also evidence that the ‘economic catch-up’ forces I described in Towards a New Russian Century? are in gear.
Since Russia’s population decreased about 0.15% in 2007 (according to my calculations), this means that GDP per capita growth was even more impressive than the growth in absolute GDP. This figure increased from 12,100 $ in 2006 to 14,600 $ in 2007 (again, mostly due to the World Bank’s revision of prices). This means that Russia has overtaken Malaysia (14,400 $), Chile (14,400 $) and Argentina (13,000 $) in its GDP per capita. It is also significantly ahead of Mexico (12,500 $), Romania (11,100 $), South Africa (10,600 $), Brazil (9,700 $), Turkey (9,400$) and Ukraine (6,900 $), and head and shoulders above China (5,300 $) and India (2,700 $). It does, however, have some catching up to do with Poland (16,200 $) and the developed world in general, for instance the European Union (32,900 $). Nonetheless, the fact that in one year Russia’s GDP per capita has transformed from being 86% to 90% of Poland’s and from 41% to 44% of the EU’s illustrates that things are moving in the right direction.
When discussing Russia’s economic growth in a developmental context we must emphasize the fact that unlike most other countries, it is on the background of a decreasing population. Take the example of India. Although its growth rate since 2000 was about 7-8%, in contrast to Russia’s 6.5%, taking into account its 1.5% population growth rate means that in fact, if anything, its real GDP per capita has been in relative decline to Russia’s – and this despite the fact its absolute figure is 20% that of Russia’s. The same can be said for many Latin American and Southeast Asian countries. Perhaps I’ll write in more detail about this sometime later.
Growth at 7.4% per annum was higher than 2006’s 6.6%, and as in the year before driven primarily by growth in consumption and increasing investment, not in the ‘oil bubble’ as so many ignorant Russophobes would have it. This is made all the more impressive by the fact the labor force fell from 73.9mn to 72.4mn, implying productivity per economic participant grew by well over 8%.
The Gini index (a measure of inequality) was estimated to have increased from 40.5 to 41 from 2005 to 2006. While this is a high figure, it is lower than in the US and far from apocalyptic (click on the link). The investment rate as a percentage of GDP increased from 18.2% to 19.4%; while still quite a lot lower than optimal, this is nonetheless comparable to countries like Poland (21.8%), Chile (21.0%) and Malaysia (20.2%) – all of which have demonstrated respectable growth – and higher than in fellow BRIC member Brazil (17.9%).
The federal budget had 342bn $ in revenues and 244bn $ in expenditure out of a total market-exchange rate GDP of 1251bn $, up from 222bn $ and 157bn $ out of 733bn $ in 2006, respectively. There are several caveats, however. While spending seems to be much lower than in France or the UK, a) this only accounts for federal expenditures – in fact, total public spending is around 31.9% of GDP for 2007 and b) this is as measured by MER GDP. Converting to PPP and accounting for regional expenditures will bring the total up to 662bn $. This does not include the fact that many of Russia’s poorer citizens (i.e. on state salaries) get benefits like transport subsidies, which aren’t directly measured in state spending.
Oil production increased from 9.4mn to 9.68mn barrels per day from 2005 to 2006, but domestic consumption grew from 2.5mn to 2.9mn barrels per day (leaving no room for increases in exports). Production increased by a similar amount this year (about 3%). This again demonstrates how the Russian economy could not be said to be dependent on increasing oil production for most of its growth.
Finally, FOREX reserves rose from 315bn $ to 470bn $ from 2006 to 2007 year end. There is also an interesting statistic that the value of Russia’s publicly-traded shares was 1322bn $ in 2006 – making it comparable in absolute size to France, Germany and Switzerland.