EDITORIAL: Putinomics on Life Support


Putinomics on Life Support

Streetwise Professor reports:

The monthly GDP indicator data suggested the Russian economy continued to contract in August. However, the annual rate of decline slowed further from May’s revised record -9.9%. In August the GDP Indicator registered -3.9%, the highest reading in 2009 so far. The Indicator has now spent nine months in negative territory, a longer sequence than the previous seven-month spell from September 1998 to March 1999. The currentaverage rate of decline is also much sharper than in the previous downturn, at -6.4%.

Worse than 1998! 

When the epitaph of Putin’s Russia is written, surely this moment will have a prominent place therein.   SWP adds: 

To put things in perspective, Russia’s best monthly reading of -3.9 percent is between the US first quarter contraction of -6.4 percent and the second quarter contraction of -1.0 percent.  In output gap terms, however, the Russian performance is even worse given Russia’s substantially higher pre-crisis growth rate. The unfavorable comparison to 1998–the supposed nadir of Russian economic fortunes, and the standard by which Putin wants to be evaluated – is particularly dreary.  is growing at 8 percent–although as I’ve written repeatedly, I consider that to be 9 parts mirage, 1 part reality.  India is growing at about 6 percent.  Brazil is contracting at about a 1 percent rate and may eke out 1 percent growth for 2009.

The Russian economy as managed by Vladimir Putin is,  in other words, an abject disaster.  In the World Economic Forum’s most recent ranking of economic competitiveness, Russia fell a shocking 12 places from its already pathetic rating of #51 out of 134 nations to an abysmal #63.  This is a nation that purports to deserve a spot on the G-8 panel!

In fact, just as SWP suggests, Russia doesn’t even deserve it’s “BRIC” membership — it’s WEF rating is the lowst of the four nations that comprise that entity (Brazil is at #56, India at #49 and China leads the way at #29.  Mexico is ahead of Russia, and the United States is #2 in the world.

And yet, the lemming-like denizens of Russia go on favoring the Putin regime with nosebleed-high levels of approval, just as they did in Soviet times.  How can they, then, expect any other fate than what the USSR experienced?

10 responses to “EDITORIAL: Putinomics on Life Support

  1. It would be interesting to know what La Russophobe thinks about Daniel Thorniley of The Economist group and his opinions about Russia. He seems very much at odds with her to me! He has been on RT and said that more nonsense is written about Russia than anywhere else in the world. He also seems to think that Russia is a great place to invest in. Is there anyone at La Russophobe who can explain away this seemly very well educated contrarian? I would very much like to know how to reconcile such seemingly disparate views! Anything you can say or tell us would be much appreciated as I do have respect for the views expressed here by the staff of La Russophobe. Keep up the good work!

    • There were lots of people who said such things about Nazi Germany and Stalin’s Russia too. The fact that he would appear on a forum like Russia Today, given what we’ve documented about them, is proof enough of how reliable his views are.

    • poluchi fashist granatu

      Good investment advice. The worse the Russophobe hysteria about Russia, the better the opportunity to invest in it! (PS. Get the heck out should LR ever start praising Russia).

  2. Odd that a Russophile would complain about the quality of what is writen about Russia when so much of it seems to ignore all negative indicators and cheer even the smallest and most anecdotal possitive stories.

    I would certainly recommend that Russophiles and far-leftists and Islamic supremicists of all stripes invest their money in Russian companies. No time like the pressent.

  3. Investing in Russia is also Shariah complient – no interest.

  4. I spend a lot of time in my day job talking with Western and Indian businessmen about Russia, and they usually fall into three categories:

    a. Those who see the vast *potential* of Russia — its resources, growing and under-serviced consumer sector, with all the attendant support industries like the financial sector — and just can’t believe that someone hasn’t made money there yet. They think in terms of typical Third World countries and tell me, “Sure, there’ll be some problems and hiccups, but just like in (Mexico, Brazil, Nigeria, Indonesia, fill in name of Third World country here), we’ll make out!”

    b. Those who are already heavily invested and committed in Russia, who feel obligated to keep talking it up even though when you press them for the real results they’ve achieved so far, the honest ones almost always will admit that they’re losing money hand over fist and having major problems dealing with corrupt Russian institutions. There is a very large Western European company in particular I’ve spoken with for years who has been stubborn in their determination to make a profit in Russia, but after more than a decade and a half, they’re still losing money and don’t like to admit that fact too publically.

    c. Those in category “b” above who admit that they’ve been in Russia a long time and haven’t made any money, but insist that someday — someday! — they will. And sure, maybe 30 or 40 years from now, in a post-Putin Russia, maybe…

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