The past GDP does not support the current one – Newspaper Kommersant No. 2 (7447) dated 01/10/2023

At the very end of 2022, Rosstat published updated statistics on Russian GDP. The estimate of economic growth in 2021 has been significantly upgraded to 5.6% from 4.7%. The estimate of the decline in GDP in 2020 is left at the level of 2.7%. As a result of the new assessment, GDP growth in 2021 turned out to be the highest since 2007, and the revision itself was a record for the entire history of such pre-New Year “revaluations”, in nominal terms, the volume of GDP was increased by Rosstat by 4.3 trillion rubles.

Explanations of statisticians about the reasons for the revision are as vague as possible. It is said that it is the result of “annual results of federal statistical observations, data from the annual budget (accounting) statements of the Federal Treasury … the results of the development of annual tables of resources and the use of goods and services for 2020, updated data from industry statistics and the balance of payments.” The Ministry of Economy added that the new figure for GDP growth in 2021 is “evidence of the high adaptability of the Russian economy to external challenges, its ability to quickly “regenerate” and transform.”

It should be noted that such a significant revision of the indicator due to the “base effect” may significantly worsen the result for 2022. Prior to the publication of revised data, the Ministry of Economy estimated the decline in GDP for January-November 2022 at 2.1%, with an annual decline forecast of 2.9%. In mid-December, Vladimir Putin noted that the economy is expected to fall at the level of 2.5% – this is likely to be the case by the end of 2023 (the first estimate will appear in mid-February).

When commenting on quantitative data, representatives of the authorities are less willing to discuss the quality of economic dynamics. Published along with the revision for 2021, the data on the use of GDP for the third quarter (this is the sum of the spending of all sectors on final consumption, gross capital formation and stocks, net exports) does not record improvements. A positive contribution to the change in GDP at the end of the year, most likely, will be made only by spending on imports.

Against this background, the intra-annual dynamics of the economy deteriorated noticeably by the end of 2022 (see chart), primarily due to the service sector and private demand. Although the scenario of a sharp collapse and an equally sharp recovery of the Russian economy did not materialize, the option of a long, sluggish recession is becoming more and more likely.

Artem Chugunov