Russia, between fantasies of “l’Affaire Depardieu” and reality

Paper kindly  translated by Anne-Marie de Grazia

 

The media hubbub provoked by Gérard Depardieu garnering a Russian passport is provoking an outburst of simplistic opinions about that country. Russia is far from perfect – agreed! Corruption in the administration is considerable, and obviously recognized as such in the highest spheres of the state. The firing last December of the Minister of Defense and of several persons in charge of the armed forces is witness, if such was needed, to the fact that the question of corruption is today of capital importance in public opinion. But Russia is also a country which has known for several years a growth that is far from negligible.

Graph 1

 

Source : Statistiques de la Banque Centrale de Russie : URL http://www.cbr.ru/eng/statistics/print.aspx?file=macro/macro_12_e.htm&pid=macro&sid=oep

We notice that the real growth in GDP remains above 3%, even if it has tended to slow down during these past months. Russia is evidently not spared by the contraction of activity in the European Union which remains its first customer for commodities but also for semi-finished products. The hike in fixed capital investments is good news in this context, indicating that the Russian economy continues to progress on its way to modernization. In the same way, the increase in revenue in the retail trade indicates that internal demand in Russia remains strong. In short, the economy is faring relatively well, even if Russia remains dependent on the economic situation  in the European Union, which is undeniably a problem it will have to face from now on.  It is for this reason, by the way, that the government and the large public companies are financing new transport networks in order to feed Asian needs. The ambition of Russian industrialists is to become the first suppliers of China and India in gas and oil, but also to increase their market-share in steel, aluminum and chemicals. This strategy will involve, in the coming years, a major effort in the modernization of metallurgy, but also a hike in quality. Meanwhile, modernization in the processing industry, the automobile and aerospace industries and in shipbuilding proceeds apace. In due time, Russia will again become a producer of industrial goods, even if it will always remain an exporter of commodities.

This economic dynamism has important social consequences.

Graphique 2

 

The monetary income of households has taken some blows in connection with the 2008-2010 crisis. But overall, the evolution has remained positive. The government has dipped into its reserves to avoid too strong an impact from the crisis. Since the second half of 2010, the unemployment rate, calculated according to the methodology of the International Labor Organization, is regularly decreasing. It reaches now 5.3% of the active population, a figure worth thinking about in a country like ours, which is experiencing an unemployment rate above 10%….

Financial reserves have been rebuilt. The Central Bank of Russia held at the end of December 2012, 532 billion dollars in reserve (406 billion Euros), representing the value of 17 months of imports.… The trade surplus for the month of October was 14.5 billion dollars, and for the first nine months of the year (from January to September) 150 billion dollars. Under these circumstances, the two reserve funds shored up by the government, the « fund for future generations » and the «stabilization fund » have seen their amounts increase significantly.

The budget deficit should be comprised between 0.8% and 1.3% of GDP. Now, nominal growth for the latter  is 3.3% (in real terms) to which must be added 6.5% inflation. The Debt/GDP ratio will therefore go on diminishing. It is true that it amounts now to… 11% of GDP, which is one of the lowest in the world for a developed country.

So, even if one must remind oneself that the economic situation is not perfect, that one could (and should) do more and better in the areas of the modernization and diversification of the economy; that social questions do not reduce themselves to unemployment questions and that it is important for the very development of the economy to increase social guarantees for the workers and to fight poverty, it appears clearly that the economic situation of Russia is better than that of the Eurozone and that of France. Russia deserves better than the caricatures it is the butt of in France. The Depardieu affair should at least bring commentators and journalists to give up their clichés, sometimes conveyed by the Russians themselves, and to look objectively at the evolution of Russia.

Citation

Jacques Sapir, “Russia, between fantasies of “l’Affaire Depardieu” and reality”, published on the blog Russeurope 09/01/2013, URL: http://russeurope.hypotheses.org/705

Reading the following article

La Russie entre fantasmes et réalité

Translation

Translated from the French : Jacques Sapir, “La Russie, entre les fantasmes de l’affaire Depardieu et la réalité”, billet publié sur le carnet Russeurope le 04/01/2013


Jacques Sapir

Ses travaux de chercheur se sont orientés dans trois dimensions, l’étude de l’économie russe et de la transition, l’analyse des crises financières et des recherches théoriques sur les institutions économiques et les interactions entre les comportements individuels. Il a poursuivi ses recherches à partir de 2000 sur les interactions entre les régimes de change, la structuration des systèmes financiers et les instabilités macroéconomiques. Depuis 2007 il s'est impliqué dans l’analyse de la crise financière actuelle, et en particulier dans la crise de la zone Euro.

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