Thursday, August 24, 2023

Russia Unlikely to Retain Its Fifth Place Ranking in World’s Economies, Moscow Expert Says

Paul Goble

            Staunton, Aug. 21 – The World Bank ranked the economy of the Russian Federation in 2022 fifth in the world by using not nominal figures but rather purchasing power equivalents. But Russian experts say that the economy of their country and of others is changing so rapidly that Russia won’t be able to retain that figure now even if similar statistical techniques are used.

            The reason is simple, Igor Nikolayev, a senior scholar at Moscow’s Institute of Economics. Last year, raw materials which Russia sells are getting cheaper, and the ruble exchange rate is falling. That makes it likely that Russia’s ranking will decline as well (

            The nominal GDP of the Russian Federation in 2022 was 2.22 trillion US dollars, while its GDP calculated according to purchasing power parity was 5.51 trillion US dollars, a difference of more than two times and the only way that Russia could rise in the rankings to fifth place.

            PPP calculations are intended to show what people could actually buy with their money, but they don’t always fulfill that task because one has to earn money in hard currency and have access to markets. Moreover, PPP calculations assume that some currencies are undervalued but practice shows that those which are undervalued don’t tend to rise in value but to fall further.

            Indeed, that is what is happening with the Russian Federation. The World Bank calculations using PPP for rankings reflected a specific conjunction of trends, but that coming together of various factors won’t be repeated this year or likely for some years to come. That means that Russia won’t be in fifth place this year or anytime soon.


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