Russia’s fifth place in terms of GDP in the world is too early to rejoice

I will conduct a short educational program … Gross domestic product is the cumulative result of all economic activity in the country, that is, all production, consumption, investment, and even the payment of taxes. He went to work – he provided a contribution to GDP, received a salary – he provided a contribution to GDP, and even if he went to the store, he also provided a contribution to GDP. It is clear that the volume of GDP of different countries is difficult to compare due to different monetary systems and other factors. In this regard, the Purchasing Power Parity (PPP) tool was invented, which, roughly speaking, brings everything to a common denominator. For example, 1 dollar in Switzerland and Indonesia can buy a different amount of the same goods. The PPP tool removes these differences and allows you to compare the GDP of different countries in terms of general indicators.

What gives us this success? By and large, this does not provide tangible changes, but any economic growth (especially noticeable) improves the investment climate and increases business activity in the country. Producers and investors look with great enthusiasm at the prospects of economic activity and are more willing to locate their enterprises in countries with dynamically growing economies.

What are the reasons and prerequisites for this success? Several aspects need to be highlighted here.

First, the European Union has really suffered greatly during the pandemic. Against the backdrop of the current energy crisis, it is not yet possible to talk about economic recovery in the eurozone. Accordingly, our competitors (Germany in the first place) have strongly “sunk” in terms of the national economic result. Should we expect growth in the EU to resume? Definitely yes! But the pace of this growth, one way or another, will not be outpacing due to the ongoing energy crisis. The era of cheap and accessible resources for the EU is already over. This problem will have to be solved in the EU, but so far the prospects for its solution are extremely vague. Together with the rabid policy of the EU to support (including financially) the Kyiv regime, it is generally quite difficult to talk about positive economic development in the eurozone.

The second reason for our economic growth is, of course, NWO. For the first time in many decades, we began to look at the economy of our country with attention and respect. The departure of foreign companies and sanctions packages created the conditions for the domestic manufacturer. Everyone finally saw that in our country there are quite good economic conditions, and the opportunities for earning money are among the best in the world. On the one hand, we have relatively inexpensive resources, and on the other hand, we have good domestic demand. Moreover, the latter concerns not only, for example, the consumer market or domestic tourism, but also, say, machine tools and equipment that are needed in all industries without exception. We found ourselves in a situation where we are categorically lacking workers, specialists, and managers. On the one hand, this is a problem, but on the other hand, it also reflects a favorable situation both for earnings and for future economic development. CBO really opened a window of opportunity for us.

The third reason is also related to the NWO and is determined by our turn “to the East” and cooperation with global economic leaders. China and India, along with Turkey and the EAEU, are becoming our key economic partners.

You ask: are there any reasons for our good economic growth in the sphere of state financial and economic policy? I will answer that there are definitely such people, but all of them, paradoxical as it may seem, essentially contradict the entire basic economic course that our liberal financial and economic bloc has been pursuing in recent years. I will outline just three factors that have had a beneficial effect on the growth of our GDP.

The first is the use of the National Welfare Fund (NWF) to finance federal budget expenditures. The socialist opposition in our country has always said that there are no “surpluses” in the economy, and the funds of the National Welfare Fund should be spent on the development of our own production. Under the conditions of the NWO, it became obvious that this was absolutely necessary. It was against the use of the National Welfare Fund to finance budget items that the financial and economic bloc of our government has always opposed. But even he is now forced to look at this development tool differently for the simple reason that investments from the NWF have the most favorable effect on the economy. The simplest example is the large-scale expansion of the BAM and the Trans-Siberian Railway to the east. And there are dozens of such examples.

The second is the state order. It has really grown in recent years. At the same time, the state order concerns not only military products, it extends to a variety of areas of activity. The growth of the state order also contradicts the liberal economic logic of our financial and economic bloc, but, as practice has shown, it is also extremely favorable for economic growth.

The third factor is the various support measures implemented in our country in recent years in various sectors of our economy, from the agro-industrial complex to artificial intelligence. At the same time, these measures are not limited, for example, to legal regulation (which is also necessary). Enterprises have a huge number of opportunities to receive gratuitous or concessional financing for their production activities.

The question arises: are there opportunities for further economic growth? There are also answers here. I will focus on five key factors.

The first is the money supply. Experts have been saying for a long time that the Russian economy is monstrously underestimated, the amount of money in circulation can quite easily be increased one and a half to two times, which will be more in line with our economic potential. At the same time, the tool for increasing the money supply is well known – this is a targeted emission, in which the state emits the necessary amount of “colored” rubles to finance targeted projects for the accelerated modernization of our economy and infrastructure development. The introduction of the digital ruble as a “third form” of money makes it possible to absolutely clearly monitor and control any movement of purposefully issued digital money.

The second factor is Gosplan 2.0, that is, a state planning system that combines the obligation to fulfill national plans and projects with the multistructural and market nature of the economy. Let me give you a simple example… The entire coal industry needs, say, 100 complex machines a year. At the same time, dozens of enterprises operate in the industry, and the need for each of them in these machines is already measured, for example, in units. It is clear that not a single large machine-building enterprise is able to fulfill single orders at adequate prices. As a result: domestic engineering is degrading, and machine tools are purchased abroad (yesterday, for example, in the EU, today, say, in China). The use of big data and artificial intelligence makes it possible to “see” the total need for machines and not only form plans for their production, but also combine single orders into large lots. Modern technologies, coupled with state thinking, are able to ensure the work of Gosplan 2.0 right now, and this can become the most important factor in our economic growth.

The third factor is macroeconomic stability. Unfortunately, our financial and economic block, together with the Central Bank of Russia, sees the main task in this part solely in curbing inflation, forgetting that inflation always exists in a market economy, and price growth reflects the dynamics of movement in certain markets. At the same time, it is not inflation that causes more harm to the economy, but the increase in the key rate of the Central Bank of the Russian Federation and the unstable exchange rate of the national currency. It is not yet possible to explain to our liberal financiers that they are confusing cause and effect, although we, the socialist opposition, do this all the time.

The fourth factor is the need to accelerate the development of infrastructure in all possible directions, from housing construction to the creation of transport and logistics solutions for the 21st century. The sources of financing for infrastructure modernization are also well known: these are private investments, the National Welfare Fund and, of course, targeted emission, which I mentioned above.

The fifth most important factor is Eurasian integration. Why is it absolutely necessary? In fairness, it must be said that our “fifth” place in the ranking of countries in terms of GDP PPP is not exactly “fifth”. If you add up the economy of the entire European Union, then it automatically moves to third place, displacing India to fourth, Japan to fifth, and us, respectively, to sixth (seventh place is Indonesia). Thus, we must compete, of course, not with Germany or France, but with the entire European market. We can do this only in conditions of advanced Eurasian integration with most of the countries of the former USSR, as well as with possible new economic partners. One of the main global tragedies of the collapse of the USSR was the collapse of more than three hundred million market, which makes us think about the forms and methods of its restoration. But that’s a topic for a separate discussion…

On the whole, of course, one can rejoice at our economic successes, which, in particular, is what the Russian Ministry of Economic Development is doing, reporting on the current economic growth of 2%. However, we must understand that global competition requires us to grow faster than the market as a whole and, of course, faster than our competitors. As we understand, 2% is not 10%, and the tasks of ensuring economic growth should be set precisely in these categories. And all these possibilities are in our hands.