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Putin’s Flatlining Economy

Protracted economic stagnation and a much higher COVID-19 mortality rate than is being officially reported in Russia mean that President Vladimir Putin cannot base his regime's legitimacy on quality-of-life improvements. This suggests that more censorship, propaganda, and foreign adventurism are to be expected.

PARIS – In recent weeks, macroeconomic forecasters have presented new, more optimistic global predictions for 2020 and 2021. Given the rising second wave of COVID-19 infections and deaths in much of the world, grimmer forecasts are likely to replace them soon. But even the relatively sanguine current outlooks provide little hope for economies like Russia, which was stagnating well before the pandemic.

To be sure, on September 30, Russia’s Ministry of Economy published a relatively sanguine official forecast: its baseline scenario is that GDP will contract by 3.9% in 2020, but will average 3.2% annual growth in 2021-23. Yet the ministry has a track record of being excessively optimistic.

Russia’s Accounts Chamber – another government agency, led by former finance minister Aleksei Kudrin – criticized the Ministry of Economy’s bright forecast. The Accounts Chamber has a far more somber outlook: a 4.5% decline in GDP in 2020, and average annual growth of only 2-2.2% in 2021-23. This is more closely aligned with the International Monetary Fund’s expectation of a 4.1% drop in 2020, and 2.4% annual growth in 2021-23 (slowing down to 1.8% by 2025).