Using the WEO estimates for April 2024 (the July update shows no growth update for 2024, and -0.3 ppts in 2025 y/y), we can see the next trajectory of Russian output, and Russia’s pre-military spending .
Figure 1: Russia GDP (blue), and GDP pre-military spending (red), all in billions of rubles for 2021. Light green indicates projection. Source: GDP, IMF World Economic Outlook, April 2024 database, and SIPRI [1]SIPRI [2].
The above figure assumes that the military uses goods and services, so that production costs are equal. Remember that GDP does not include depreciation (which, between the depletion of the inventory of stored tanks, and the obsolescence of machinery dependent on foreign imports, has increased).
This means that the growth rate of public expenditure is much lower than GDP.
Figure 2: Year-on-year growth rate of Russia’s GDP (blue), and ex-military GDP expenditure (red), all in billions of rubles for 2021. Light green indicates projection. Source: GDP, IMF World Economic Outlook, April 2024 database, and SIPRI [1]SIPRI [2].
Cumulative GDP growth in 2023 from 2021 is 2.3%, compared to 0.3% of pre-military cumulative GDP.
Although the IMF and the World Bank project a positive growth rate by 2025, as does the MoF’s baseline scenario, the MoF’s constrained scenario does not allow for any growth. Gorodnichenko sees the recession, as recounted in this post.
Source link