The NYT headlined a piece on the dismal state of Russia's economy, "Russia economy worsens even before sanctions hit." The piece goes on to describe an economy in decline telling readers about Russians moving abroad and storing cash in safe deposit boxes and foreign currencies. It reports:
"Russia’s $2 trillion economy was suffering from stagflation, that toxic mix of stagnant growth and high inflation typically accompanied by a spike in unemployment. In Russia, joblessness remains low, but only because years of population decline have produced a shrunken, inadequate labor force."
The data from the I.M.F. tell a somewhat different picture. While growth has slowed in the last two years, per capita income has more than doubled in the country since Vladimir Putin took office in 1998. The NYT may not like Russia's "shrunken inadequate labor force," but members of this shrunken, inadequate labor force probably care more about the unemployment rate than the NYT's condemnations.
The I.M.F. projects an inflation rate of 6.2 percent for both this year and next. This is high for members of the 2.0 percent inflation cult that occupies central banks in the west and top economics departments, but folks familiar with economic data know that many countries have had long stretches of healthy growth with higher inflation rates. While the piece did find people who were unhappy about this inflation rate, people with better memories would recall that Russia had double-digit inflation as recently as 2008.
While the private equity investor who is one of the main sources for the piece predicts that Russia will default on its debt, it's difficult to see the basis for this assertion in the data. The I.M.F. reports that it has a deficit of less than 1.0 percent of GDP and its debt-to-GDP ratio have been on a downward course. It has a current account surplus. Furthermore, the I.M.F. shows that investment is almost 24 percent of GDP. This compares to less than 20 percent in the United States.
In short, the data for Russia reported by the I.M.F. would be consistent with the 80 percent approval rating for Putin that the article mentions, even if the economic picture painted by the NYT is not.
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