Rosstat showed GDP at its best

The first estimate of the decline in GDP in 2022, published by Rosstat on February 20, turned out to be much better than all expectations – minus 2.1%. The main reason for this is the high export earnings of corporations and increased budget spending. Export earnings paid for the more expensive and inaccessible investment imports, while budget expenditures were spent, among other things, on the increased cost of state administration and “ensuring military security.”

The first assessment of GDP in 2022 was not easy for Rosstat – statisticians postponed the publication twice for “technical reasons”. As a result, on February 20, it was reported that the Russian economy shrank by only 2.1% last year. This is noticeably less than not only all consensus forecasts, but also the latest expectations of the Central Bank (minus 2.5%) and the Ministry of Economy (minus 2.9%). Recall that in 2021, GDP grew by 5.6% as a result (before this estimate, Rosstat spoke of an increase of 4.7%). Non-oil and gas GDP in 2022 decreased by 2.7% after growing by 5.1% in 2021, its share in the total economy has become the lowest since 2018 – 80.6%. In per capita terms, the decline in GDP in 2022 turned out to be the largest since the crisis of 2009 – we note, however, that this indicator has no significant relation to assessing the well-being of the population.

In the assessment of Rosstat published on February 20, first of all, attention is drawn to the record statistical discrepancy in the volume of GDP of 3.7 trillion rubles.

It is the difference between estimates of GDP by production and consumption methods. On average, for 1997–2020, the statistical discrepancy in current prices did not exceed 200 billion rubles, says Rodion Latypov, the author of the Solid Numbers Telegram channel. He sees the reason for this discrepancy in the fact that budget expenditures at the end of 2022 turned out to be 2.1 trillion rubles. more than planned, and in December they were record-breaking (6.7 trillion rubles). “Probably, part of the state’s spending, reflected in the consumption components of GDP, did not have time to be translated into production,” the expert believes.

Meanwhile, the indicators for the fourth quarter of 2022 (Rosstat will report on GDP dynamics in this period only in March) are unlikely to qualitatively differ from the annual GDP production statistics. Last year, value added grew only in mining, agro-industrial complex, construction, hotel and restaurant services, public administration and military security, as well as in IT.

From the point of view of the use of GDP, final consumption expenditures in annual terms decreased by 0.6% – due to household expenditures (minus 1.8%) due to lower demand for non-food products. The state’s spending on consumption against the background of increased budget spending increased by 2.8% due to collective services. Gross capital formation decreased by 3.2% due to a decrease in inventories, but the accumulation of fixed capital and valuables increased by 5.2% in the massive expenditures of companies on expensive and scarce investment imports (the deflator of such expenditures is 14.1%).

Rosstat does not provide data on changes in the shares of exports and imports, but based on the structure of GDP use, the share of net exports increased from 9.3% in 2021 to 12.8% in 2022 “due to a significant excess in prices of exported fuel and energy products over import prices.

The share of internal final demand decreased: in terms of expenditures on final consumption – from 67.3% to 65%, gross capital formation – from 23.4% to 22.2%.

As a result, according to Hard Figures, the main contributor to the contraction in the economy in 2022 (minus 1 percentage point, p.p.) was household demand. Gross capital formation (due to declining inventories) and net exports (the difference between exports and imports) reduced GDP by 0.8 percentage points each. A positive contribution to the dynamics of the economy (plus 0.5 percentage points) was made only by state consumption.

In 2023, Alexander Isakov of Bloomberg Economics sees three risks to GDP. This is a reduction in government spending (adjusted for rising prices, the current plan assumes their fall by more than 10% compared to 2022), a decrease in oil production and a slowdown in the growth of lending to individuals. “If the level of oil production remains above 10 million barrels per day during the year, and federal budget spending remains at least at the level of last year, then GDP will rather grow (at the level of the IMF forecast of plus 0.3%) than decrease,”— the expert thinks.

Artem Chugunov