Putin Doesn’t Care About Economic Growth
The Russian economy is at a standstill, with GDP growth having averaged just 0.4% annually from 2014 to 2018. And Russia’s economic prospects are unlikely to improve substantially anytime soon, for a simple reason: Putin’s indifference.
MOSCOW – Even Russian President Vladimir Putin’s most loyal followers would have to admit, if only to themselves, that this year’s televised call-in program – an annual event during which he responds to citizens’ questions directly – went worse than ever before. Citizens wanted to know why their lives aren’t improving under Putin, with some even asking when he would leave office. The president’s reassurances were not convincing.
The Russian economy is at a standstill. From 2014 to 2018, GDP grew by just 1.85% – or 0.4%, on average, each year. (The Kremlin forced the Federal State Statistics Service to revise upward the figures for 2016 and 2017.) During the same period, real disposable incomes shrank by 10.7%, leaving 13% of all Russians living in poverty. In 2018 alone, 600,000 Russian companies shuttered their operations.
To some extent, these developments are not surprising, given the sanctions imposed on Russia by Western countries after Russia’s annexation of Crimea in 2014. Those sanctions contributed to massive capital flight – in excess of $317 billion – in 2014-2018, as well as a drop in investment. In the first nine months of 2018, the volume of foreign direct investment in the Russian economy was 11 times lower than during the same period in 2017.