Staunton, September 5 – Assessing the state of the Russian economy and predicting its future is extraordinarily difficult during the pandemic, Geogry Ostankovich says; but two errors must be avoided: recovery is not the same thing as growth and growth is not the same thing as development.
Many political figures are inclined to call recovery growth and growth development, the senior economist at the Moscow Higher School of Economics. They are neither. Recovery will produce an uptick in GDP but from a new lower base, and any increase in GDP either then or after recovery is not the same thing as development (iq.hse.ru/news/396411977.html).
GDP is “far from the only ‘barometer’ of economic life,” Ostankovich says. Other important measures include the standard of living of the population, the ecological situation in the country, labor productivity, as well as the quality of goods and services produced. All these things must be considered if the state and direction of the economy is to be assessed adequately.
“Some countries” including Russia over the last six years “have risked a decline in the level and quality of life” in the race after GDP increases alone. Between 2014 and the start of the pandemic, Russia’s GDP did increase but the standard of living of the population and other key measures all fell.
With the pandemic, both fell; but it will matter profoundly whether the country’s leaders again seek only GDP increases or recognize that Russians need improvements on all these measures. A key question will be how the government addresses employment and unemployment.
Because of the way in which the Russian government treats unemployment, many people who are not really working are not counted as being unemployed. That needs to change if economic growth is to be real and all-encompassing and not just expressed in GDP increases alone.
There will be reluctance to make that change, of course, because any honest accounting of unemployment in Russia will show it to be far higher than it is now assumed and will lead to demands for improved unemployment compensation so that those who don’t have jobs will be able to lead a dignified life.
Sometime next year or the following, there is likely to be an increase in GDP as Russia and other countries come back from the pandemic-driven economic downturn. But unless these other factors are taken into account, the Moscow economist says, Russia will have “growth” without development; and its people will suffer as a result.