Bloomburg‘s recent status report on the Russian economy, with La Russophobe‘s running commentary:
Russia’s economy expanded in the first quarter at the fastest pace in six years as production of building materials and electronics increased. Gross domestic product grew an annual 7.9 percent in the first quarter, compared with 5 percent in the first quarter of last year, the State Statistics Service said on its web site Thursday. GDP figures are not seasonably adjusted in Russia. The economy, which expanded 6.7 percent last year, will probably advance 6.5 percent this year, according to the Economic Development and Trade Ministry’s forecasts. GDP may even grow 7 percent by the end of the year, Deputy Prime Minister Alexander Zhukov said Thursday, Interfax reported.
LR: So let’s see now. Growth this quarter was higher than last year, but growth for this year is projected to be lower than it was last year. Looks like Russia is in for a rough winter. And why is it that the West never remembers to report that this data is coming directly from the administration of a proud KGB spy and therefore has credibility issues (i.e., it’s a best-case scenario)? And why isn’t the puny per capita size of the Russian economy ever mentioned? Is it because the story would be less sensational if we knew that this growth translates into just pennies per Russian, far less money per person that would be produced by a much lower rate of growth in a real economy with a real base, like America’s for example? If so, shame on Bloomburg.
The growth, boosted by energy sales, has trickled down into the economy in the form of higher salaries in other industries and increased retail sales.
LR: In other words, it’s not actually economic growth at all, just the happenstance of rising energy prices. In other words, the very term “economic growth” is highly misleading where Russia is concerned.
Real wages surged 18.5 percent over the first four months of 2007, boosting average monthly wages to 12,510 rubles ($480), while retail sales jumped 13.4 percent in the first quarter, compared with 10.4 percent in the year-earlier period, according to the statistics service.
LR: Why is it that reports like this always fail to mention that a salary of $480 per month is a puny $3 per hour for a 160-hour work week (four 40-hour weeks). And that’s the AVERAGE wage, not the median. Median would mean that half the salaries are above that, half below. That data is never given. Average means that Russia’s relatively huge class of billionaires can inflate the figure for the vast class of working people far above what they actually earn. In fact, La Russophobe has never seen data for the median wage in Russia, and would love to be referred to it by some better-informed reader. Seems the Kremlin keeps it a closely-guarded secret. Notice too that the report doesn’t mention Russia’s crushing double-digit consumer price inflation the basic market basket of goods a $3/hour employee can afford. Without information like this, the hapless Westerner would think a salary increase of 18% means the same in Russia as it does in the west, and rush to invest in the Russian economy.
Milder temperatures gave a boost to industrial output, helping the economy expand faster, said Vladimir Tikhomirov, chief economist at UralSib. Industrial output increased 7.9 percent in the first quarter of the year, compared with 4.1 percent in the same period last year, according to the statistics service.
LR: So not only is the Russian economy dependent on the vagaries of the international markets for its survival, but also the weather? That’s not exactly a roadmap for stability. Why is it that Russia’s puny industrial base is never mentioned in reports like this, so that the per capita value of 7.9 percent growth can be seen? Then again, all you have to do is ask yourself when you’ve ever seen a Russian industrial product available for sale in your neighborhood (or, indeed, any Russian product of any kind) to understand how misleading this data really is.