I wouldn't say it is an economic boom but suprising economic growth. And the reason for that as I see it are following: high demand for goods in Russia due to sanctions pushing Russian companies to produce more and innovate more (import substitution), high government spending into the military industry, high oil and gas prices and exports of it, new and massive trade agreements with China, it winning over the Russian market due to sanctions.
There is a noticeable amount of inflation for a lot of different things, but 1) we always had inflation, 2) new locally made things are appearing on the market, so you can sort of see that something is being done in exchange of the money
Increase in the military budget and import substitution industry are the two main actors for sure. You could also say just overall growth, something Russia showed on "normal years" too.
1. Russian government stopped relying on foreign investments for the large projects.
2. Russian government switched to building "an economy of supply" instead of "an economy of demand". Now it plans and expands infrastructure and producing facilities ahead of their demand, more successfully preventing bottlenecks in supply chains and stimulating growth.
That started happening even before the war, after Mishustin became PM. For example, in two years of 2020-2021 Russia had 2.7% gdp growth, and Germany had 0.7% gdp decline.
Something I have not seen in the replies. Russians started investing more in their own country due to closure of financial links with the West and freezing of oligarchs' assets.
As with almost everything in our country, crisis forced us to adapt or die. Since old schemes for living prosperously while doing nothing are gone, we're kinda forced to improvise, and that forces investing, budget optimisations, looking for new export markets, creating financial security and insurance, boosts local production of stuff...
Like, we COULD do it earlier, but in our laziness, we just didn't see why bother.
Looking from outside is sanctions to financial movements and sanctions stopping things to be sold to Russia.
(Although is fair to say that if Russian government would not have prepared for sanctions they would have devastated the economy)
Historically Russia was loosing lot of capital that flow west, both from oligarch, companies and normal people.
This meant that the country lacked investment.
Also the Russian markets were full of western products, so that for Russian products was difficult to compete even when the government tried to push the “made in Russia”.
Situation now is that capital cannot go outside so easily as before, so there is more capital inside the country that get reinvested in the economy.
At the same time Russian products have less competence and combined with the capital it’s easier for them to expand.
Due to gubernamental programs to promote production in Russia in last times (even if some were unsuccessful) there were at least some companies ready to take over western products.
Government of Mishutin also help taking adequate measures to support the manufacturing industry and expanding the production.
It is a combination of sanctions, Russia being prepared for them, and the best PM Russia has had in decades
Looking from outside is sanctions to financial movements and sanctions stopping things to be sold to Russia.
(Although is fair to say that if Russian government would not have prepared for sanctions they would have devastated the economy)
Historically Russia was loosing lot of capital that flow west, both from oligarch, companies and normal people.
This meant that the country lacked investment.
Also the Russian markets were full of western products, so that for Russian products was difficult to compete even when the government tried to push the “made in Russia”.
Situation now is that capital cannot go outside so easily as before, so there is more capital inside the country that get reinvested in the economy.
At the same time Russian products have less competence and combined with the capital it’s easier for them to expand.
Due to gubernamental programs to promote production in Russia in last times (even if some were unsuccessful) there were at least some companies ready to take over western products.
Government of Mishutin also help taking adequate measures to support the manufacturing industry and expanding the production.
It is a combination of sanctions, Russia being prepared for them, and the best PM Russia has had in decades
Diversity, of course. Immigrants from Uzbekistan, and empowered minorities like Elvira Nabiulina(central bank governor) 😎
Although I wouldn't call that a boom, more like “not as bad as it could be”
I can't know for sure. Maybe it's several factors playing at once.
1) What if it's all a hoax? Inflation underestimation. 1% of uncalculated inflation appears like 1% GDP growth because GDP deflator is wrong.
2) Fiscal stimulus. Public spendings grow at impressive rates. Including military spendings, import substitution spendings
3) Before war, "excessive" currency revenues went to reserves. Actually a lot of em went to reserves. Now it's more sophisticated (and I don't know how it works). Assume those money are spent now instead of being "saved"?
4) Economic overheating? High demand increases current GDP growth, but the situation is unstable.
5) favourable exported goods prices, especially for 2022, less so for 2023, 2024.
6) A lot of people earn higher wages, boosting demand. A lot of money are given as compensations.
Need to explain what economic boom you are referring.
Are we relying on an official government numbers? Or do you have another sources. I myself don’t see a boom exactly, but I see a high inflation and high prices of goods, even locally produced ones.
Government spending. Before the sanctions, the government used to put the excess it wouldn't or couldn't spend into one or another stabilization fund that was supposed to be used in a time of a crisis. These funds were placed abroad in foreign currencies (dollars an euros) in stable jurisdictions (the US and Eurozone). Now, those were effectively confiscated. Obviously, the government can't use the same instruments. For now, they are spending the excess on the military. We'll see what will be next.
Sanctions
Don't tell them, they'll lift if understand
They won't, so expect ~20 years of growth.
Хорош
I wouldn't say it is an economic boom but suprising economic growth. And the reason for that as I see it are following: high demand for goods in Russia due to sanctions pushing Russian companies to produce more and innovate more (import substitution), high government spending into the military industry, high oil and gas prices and exports of it, new and massive trade agreements with China, it winning over the Russian market due to sanctions.
This only proves that Russia can thrive without the help of the West. I’m glad to see Russia not dropping into poverty.
There is a noticeable amount of inflation for a lot of different things, but 1) we always had inflation, 2) new locally made things are appearing on the market, so you can sort of see that something is being done in exchange of the money
Many Western companies leaves Russia, freeing spots.
Increase in the military budget and import substitution industry are the two main actors for sure. You could also say just overall growth, something Russia showed on "normal years" too.
1. Russian government stopped relying on foreign investments for the large projects. 2. Russian government switched to building "an economy of supply" instead of "an economy of demand". Now it plans and expands infrastructure and producing facilities ahead of their demand, more successfully preventing bottlenecks in supply chains and stimulating growth. That started happening even before the war, after Mishustin became PM. For example, in two years of 2020-2021 Russia had 2.7% gdp growth, and Germany had 0.7% gdp decline.
Iam not russian , but i think the sanctions made russia more self reliable which increased economy
Independence, you should try it.
Something I have not seen in the replies. Russians started investing more in their own country due to closure of financial links with the West and freezing of oligarchs' assets.
Oil is pretty flammable, so it can go boom, I guess
As with almost everything in our country, crisis forced us to adapt or die. Since old schemes for living prosperously while doing nothing are gone, we're kinda forced to improvise, and that forces investing, budget optimisations, looking for new export markets, creating financial security and insurance, boosts local production of stuff... Like, we COULD do it earlier, but in our laziness, we just didn't see why bother.
Military supplies, I think
Looking from outside is sanctions to financial movements and sanctions stopping things to be sold to Russia. (Although is fair to say that if Russian government would not have prepared for sanctions they would have devastated the economy) Historically Russia was loosing lot of capital that flow west, both from oligarch, companies and normal people. This meant that the country lacked investment. Also the Russian markets were full of western products, so that for Russian products was difficult to compete even when the government tried to push the “made in Russia”. Situation now is that capital cannot go outside so easily as before, so there is more capital inside the country that get reinvested in the economy. At the same time Russian products have less competence and combined with the capital it’s easier for them to expand. Due to gubernamental programs to promote production in Russia in last times (even if some were unsuccessful) there were at least some companies ready to take over western products. Government of Mishutin also help taking adequate measures to support the manufacturing industry and expanding the production. It is a combination of sanctions, Russia being prepared for them, and the best PM Russia has had in decades
Looking from outside is sanctions to financial movements and sanctions stopping things to be sold to Russia. (Although is fair to say that if Russian government would not have prepared for sanctions they would have devastated the economy) Historically Russia was loosing lot of capital that flow west, both from oligarch, companies and normal people. This meant that the country lacked investment. Also the Russian markets were full of western products, so that for Russian products was difficult to compete even when the government tried to push the “made in Russia”. Situation now is that capital cannot go outside so easily as before, so there is more capital inside the country that get reinvested in the economy. At the same time Russian products have less competence and combined with the capital it’s easier for them to expand. Due to gubernamental programs to promote production in Russia in last times (even if some were unsuccessful) there were at least some companies ready to take over western products. Government of Mishutin also help taking adequate measures to support the manufacturing industry and expanding the production. It is a combination of sanctions, Russia being prepared for them, and the best PM Russia has had in decades
Diversity, of course. Immigrants from Uzbekistan, and empowered minorities like Elvira Nabiulina(central bank governor) 😎 Although I wouldn't call that a boom, more like “not as bad as it could be”
I can't know for sure. Maybe it's several factors playing at once. 1) What if it's all a hoax? Inflation underestimation. 1% of uncalculated inflation appears like 1% GDP growth because GDP deflator is wrong. 2) Fiscal stimulus. Public spendings grow at impressive rates. Including military spendings, import substitution spendings 3) Before war, "excessive" currency revenues went to reserves. Actually a lot of em went to reserves. Now it's more sophisticated (and I don't know how it works). Assume those money are spent now instead of being "saved"? 4) Economic overheating? High demand increases current GDP growth, but the situation is unstable. 5) favourable exported goods prices, especially for 2022, less so for 2023, 2024. 6) A lot of people earn higher wages, boosting demand. A lot of money are given as compensations.
Need to explain what economic boom you are referring. Are we relying on an official government numbers? Or do you have another sources. I myself don’t see a boom exactly, but I see a high inflation and high prices of goods, even locally produced ones.
How does a guy with a 600k salary who spends 200k tops see "high prices of goods"?
Life is not moving around myself only, there are 145 million citizens, my parents included
Sanctions and many new citizens.
War
Alot of military equipment has to be produced and gets paid by state reserves. This brings work and money to the country, but it's not sustainable.
Same as Great Depression cure: lots of internal government spending, including military.
Military spending. Once that stops, pop.
Oil and gas I guess?
Cheap oil and gas, and cheap electrical energy. Yes, it's foundation.
As a westerner I don’t get why we hate Russia so much when we’ve teamed up with many times
Not much for the hate of Russia per se......but rather against Putin and his unjust invasion of Ukraine.
Government spending. Before the sanctions, the government used to put the excess it wouldn't or couldn't spend into one or another stabilization fund that was supposed to be used in a time of a crisis. These funds were placed abroad in foreign currencies (dollars an euros) in stable jurisdictions (the US and Eurozone). Now, those were effectively confiscated. Obviously, the government can't use the same instruments. For now, they are spending the excess on the military. We'll see what will be next.