January 2014 statistics even worse than the worst expected

According to the available data, investment has dropped 7% year-over-year, retail sales turnover – 2.4%, real household income – 1.5% in Russia. Moreover, there is extremely low nominal wage growth and a small reduction in unemployment (by 0.2% against December 2013). The Rosstat previously confirmed a 0.2% decline in industrial output on an annualized basis.

It should be noted that the January results proved worse than even the worst values predicted by experts, causing a new round of concern about a new threat of recession in the Russian economy.

It stands to reason that a single month’s data is insufficient for making far-reaching conclusions about a stagnation or recession. However, one has to agree that such dynamics of Russian macro-indicators is another warning of an extremely serious situation in the Russian economic malaise: economic growth resources have been exhausted, there is no way to growth, high prices of energy resources keep can barely “push” GDP growth rate to a positive value.

Therefore, the issue of a new economic growth model has become critical for the Russia’s leaders amid forecast decline in global oil prices (see Fig. 1).

* IMF forecast.
Data source: IMF, World Economic Outlook database, October 2013.

Fig. 1. Global price of Brent crude oil in 2000–2018 ($ per barrel)

Kazakova M.V., Ph.D. in Economics, Head of Economic Development Department, Deputy Head of International Center for Budget Sustainability Study