Russia's economy is outperforming Germany's: Report
3 Min Read
German outlet FAZ quotes a Russian expert at the Vienna Institute Vasily Astrov who named two reasons for Russia’s economic resurgence - the first being the war economy and the second being the rise in real wages.
-
Russian President Vladimir Putin speaks at the St Petersburg International Economic Forum on Friday. (AFP)
According to Unherd, the Russian economy is outperforming Germany’s, especially given the country’s GDP growth.
Russian Prime Minister Mikhail Mishustin provided Vladimir Putin with an economic update that estimated a 2% growth this year. With that being said, the effect of the Western sanctions on Moscow has been a short-lived dream and nothing but ineffective.
Although the 2% figure is at the upper end of forecasts, Reuters polled a number of economists who formulated a consensus of 1.3% in growth while the IMF registered 0.7%. The Vienna Institute for International Economic Studies, specializing in Central and Eastern Europe, recorded 1%.
Amid financial deals with Central Asia, China, India, and Iran, Russia has succeeded in reviving its economy and averting the sanctions. Meanwhile, most of Europe is registering a nearing recession since many of them are dependent on the German economy which has been on a decline.
Even the German government's senior economic aide warned back in December that the inflation in Germany is likely to remain high until the end of 2024 as the country's companies spill their rising costs onto customers.
Unrealistic expectations
German outlet FAZ quoted a Russian expert at the Vienna Institute Vasily Astrov who named two reasons for Russia’s economic resurgence - the first being the war economy and the second being the rise in real wages.
On the other hand, real wages are declining due to high inflation, while in Russia, inflation is falling, from 14% at its highest last year to under 5%, according to Unherd.
Read more: Germany: Imports from Russia increased by 32.6% in 2022
While all that is good, Russia’s biggest weakness at the moment is liquidity, since the country suffered a loss of oil and gas revenues which will result in a budget deficit. Russia estimates that deficit to be 2% of GDP. However, the Vienna Institute is forecasting 3.5%.
Since last year, commentators continue to claim that Putin will literally run out of money by next year, and military forecasts continued to agree based on unrealistic predicted expectations about the level of Western support.
It is worth noting that the war in Ukraine itself cost Germany $106.7 billion by February this year. The President of the German Institute for Economic Research (DIW Berlin) Marcel Fratzscher said in February that "the Ukraine war and the associated explosion in energy prices cost Germany almost 2.5 percent, or 100 billion euros in economic output in 2022," adding that costs will continue to accumulate in the coming years.
