MOSCOW: Russia approaches, the Kremlin has sought to shore up the government’s position by highlighting indicators that the country’s economy is in recovery and promising to improve social conditions. While President Vladimir Putin is expected to easily win re-election, popular dissatisfaction with his regime has grown in recent years, bound up with an economic downturn linked to falling oil prices and Western sanctions.
Evidence points to continuing economic stagnation and distress for the overwhelming majority of the population. In 2017, Russia’s gross domestic product grew by 1.5 percent, ending two consecutive years of decline. The uptick was largely driven by rebounding world prices for oil and gas, which continue to be the mainstay of the country’s economy. . Both federal and local budgets are dependent on revenues from natural resource extraction. Oil, gas, and metal ores alone accounted for 40 percent of last year’s increased tax revenue.
Gas and coal deliveries to the European market are currently at record highs for Russia. However, shifts in Germany’s energy policy and conflicts with Ukraine over transit routes through its territory threaten Russia’s position.
Russia’s growth rate lags behind the global average, as well as that of other natural resources-dependent economies, with the exception of Venezuela. “Zero growth” is the “new normal,” declared NG on March 5.
After four years of decline, January data showed an increase in year-over-year real wages. However, real incomes, of which pension payments make up a large portion, fell. Rosstat, the government’s official statistical agency, sought to cover up this fact by including a one-time five thousand ruble pension payment made in January 2017 in its calculations. This provoked a storm of public criticism. Rosstat was compelled to release revised income data in early March.
While inflation in food prices has finally stabilized according to official statistics and 2017 saw an increase in retail sales, households continue to report high levels of economic distress. According to a recent study by the Institute of Social Analysis and Prognosis (ISAP), 40 percent of Russians do not have the resources necessary to “adapt” to the economic crisis.
