The Duran Podcast
Russian economic growth accelerates, major investment surge
All right, Alexander, let's do an update on the Russian economy. What is what is happening with the Russian economy? I think the last mini update that we did on the economy was following Putin's state of the nation address. If you want to call it an update of the Russian economy, where we touched upon how Putin is feeling very confident about the Russian economy. He's able to now plan things out five to ten years in advance. Anyway, what is the situation today with the Russian economy? Well, we've had a slew of further data for January and February, and it's interesting. First of all, production in January was higher than in January of last year. There is always a dip in January, industrial production, economic activity in Russia is always lower in January than it was in December. And it's not difficult to understand why people are out shopping by things in December, because the holidays are coming, the new year holiday, Christmas holiday. And if you're talking about the big industrial companies, they're all busy, they're all busy, fulfilling their orders for the end of the year. So there's usually a big industrial surge in December. So there's usually also a dip in January, but it was quite a shallow dip by today's, but by usual typical Russian standards. And production was significantly higher in January of this year than it was in January of last year, which has already remembered a year of recovery. But we're now getting first indications about February. And it looks like the economy is accelerating again. And there's been a jump in PMI numbers. They went up from manufacturing PMI. It went up from, I think, 52. Remember, anything above 50, as of course you know, anything about 50 in PMI tells us what purchasing managers are doing. It is a very good indicator of the way economic activity is going. So it was 52 in January. So manufacturing, manufacturing, purchasing managers in the manufacturing industry. In January we're seeing a continued expansion, but it went up to 54 and a half in February. So a jump. So investment continues to rise. Expansion in manufacturing continues to rise. And in particular, now a major surge in the car industry, the car industry needs to be zooming back. And of course, it's all now based or increasingly structured on domestic production, but also on Chinese cars. And the Chinese are now busy setting up co-production factories in Russia. They're moving in. The Russians are taking control of all the Western factories. You know, the factories where Mercedes cars used to be made and all of these Western cars used to be made in Russia. Western car companies did set up factories in Russia. What's happening is the Chinese are moving in, basically setting up co-production facilities with the Russian managers of these factories. And Chinese car production in Russia is taking off fast. So right across the board. And there's been two, well, there's been one very interesting study by a magazine called BNE Intelligence, which is basically a market intelligence magazine. Rather a good one covering Eastern Europe and also Russia itself. Just to say, just to disclose an interest, I know the person who, one of these key people that have been Harris, we are getting acquainted. It doesn't go beyond that, but just to say. And he's no friend of President Putin. I wanted to make that also clear. Anyway, BNE Intelligence, which is sponsored by various Western companies and groups and business groups. It's going to get a lot of backing. They've done a deep study of the Russian economy. And they have discovered that Russia has a bigger manufacturing base than Germany's. In other words, the gas station that masquerades as a country has more industry than Europe's biggest industrial economy, Germany's. Just say. And I saw today in the Washington Examiner, which is a rhino outfit in the United States, comment from a Western official saying about the Russians. Their industrial capacity, I mean, it's vast. The level of investment in defense industry is vast. So there we go. It turns out that this narrative, the gas station, masquerading as a country is falling apart. So how much of this is due to the narrative of the Russian war economy? No. I mean, this is the new one. You know what I mean when I say the narrative. Yeah, I know exactly. You know, this is all based on orders that are going to the Russian military industries, the military industries are surging in production. Of course, people are getting paid more. And this is also, the soldiers are getting paid more. And that is the only thing that's basically acting as the driver of the economy. And it's the sort of justification that's been created, that this is ultimately unsustainable, because the Russians will eventually achieve burnout. And that their economy is becoming like the Soviet economy, based entirely on military production. It is flat out wrong. I should say that Putin in that state of the union address, which you've talked about, he actually said we must never allow that to happen. We must never allow a situation where the entire economy becomes militarized in the way that the Soviet economy did. Now, there are lots of people throwing around GDP figures and budget figures. I would say that when people try to work out the proportion of military activity in Russia, in military industrial activity based on GDP, it's unfortunate when they do that, because if there is one thing that all of these reports are now telling us, it is that the GDP numbers that we've been working on, both the nominal GDP based upon currency exchange rates, but even to a great extent, purchasing power parity GDP figures, are wrong. They are not capturing the entirety of the Russian economy. And for that, we have to look both at both of what's going on in the economy itself, the information we're getting. And we also have to look, I think, at what Russian officials are saying, including first and foremost, an abuliner, who is the chair of the Russian central bank. And they are all talking about a very, very broad based expansion in the economy, based on higher investment. And the economy is undoubtedly now seeing a major investment surge. And what is driving economic growth is not spending by the government in military industries. It is a broad based investment surge as Russian companies work to try to fill in the gaps left by the withdrawal of Western firms from the Russian market. We're seeing wages in Russia rise. This is largely the product of a major stimulus at the economy, that the Russian government itself carried out in 2022, when they were worried that Russians were not spending money because of the sanctions shock. So they increased spending in benefits and that kind of thing. That has let translated through into higher spending. That's opened up the market that's increased interest in the market. We see Russian companies now heavily investing in expanding their production in order to fulfill the demand that exists within the Russian market. And that is the major growth driver. Military spending plays a role, but it is far from being the most important role in this overall expansion. What is happening in Russia is to some extent, well, a Keynesian demand stimulus, which we saw carried out by the government in 2022, but also, and this has just been explained by the American economist James Galbraith, it is also the economy responding quickly to the opportunities presented to Russian business by the sanctions. And Galbraith, who has always been a critic of the sort of neoliberal model that the West has tried to impose on Russia, he's made the point that what is happening in Russia to a great extent resembles the kind of Hamiltonian system that the United States used to have. You have protection, effective protection from imports. And it's not the Russian government that's created that protection. It's the West that has done through the sanctions. And that is allowing space for domestic industries to expand, to meet demand. That's all happening against a background of higher wages, because again, we've seen the effect of the demand stimulus. And that again, takes us back to the kind of Hamiltonian policies that the United States once upon a time, long ago itself used to follow. And it's producing the predictable outcome. It's resulting in a broad base expansion. The major problem is that there is a lack of workers. We've discussed this already. That is pushing up wages even further. That is causing some problems of overheating. The Central Bank is working to try to slow growth down, country again, to what everybody is saying in the West. They're trying to slow growth down to prevent this overheating taking place. There are signs that they are gradually getting on top of the problem. The overheating has resulted in a certain amount of inflation. Again, the figures for January and February, when inflation in Russia historically tends to be higher than in other months, suggest that the Central Bank's policies are succeeding. And that inflation is starting to come down. Russia's economy is expanding and surging. And the collective West economies are deindustrializing. Specifically, Germany's economy is deindustrializing. That is one of the big narratives storylines of the past two years. Yes. Incredible. It is incredible. The West has imposed a Hamiltonian model economic expansion upon Russia. Who would have thought it? But that's all the densest purposes, what they've done. There are other factors of play, which is one of them is that we're going back now to the investment search because Russian oligarchs aren't able to take their money and park it outside. They have to keep it in Russia. So what are they going to do with all their money? Well, the only thing they can do with their money is invest it in the Russian economy, something which Putin has been asking them to do. The years. And I'm now getting all kinds of reports saying all kinds of people across Russia are suddenly discovering that where it was difficult to raise investment capital before. Suddenly it's become much easier because there is so much more money now that can be invested in various things. And well, there we are. Now, it is causing its problems, its share of problems. There's been more imports. Though overall, the share of imports in the Russian economy is declining. Again, Putin provided some very interesting figures here. He pointed out that when he became prime minister, acting prime minister of Russia in 1999, imports accounted for 26 percent of Russian nominal GDP. So we always stress that this is what he's talking about. Now that's fallen to 19 percent. He expects that by 2030, it will be done further still to 17 percent, probably more than that actually. But the point is that yes, there's been imports. We've seen that oil prices have fallen back since from 2022 levels. But we now will say getting reports from, I think it was Bloomberg now again saying, once again confirming, there's no discounts any longer on exports of Russian oil. The oil price gap that we've been hearing so much about, well, that's completely ignored apparently by the market, Russian oil trades at market prices. All of that's done and gone. Western attempts to enforce the price gap that basically failed. And on oil issues, the Russians have just agreed further oil production cuts with the Saudis. So that OPEC class alliance remains intact. And as Putin pointed out, actually oil, gas, are a declining part of the Russian economy. Anyway, and again, this is what he said in his state of the union address. If you're looking at the areas of growth within the Russian economy, last year, 90 percent of them, that was the figure he gave. Well, you might query that, but I'm sure that over all these right, 90 percent of them came from outside the oil and gas sector. So there we have a modernizing, increasingly sophisticated economy. Growing fast, I would say that going back to that DNE intelligence report, the one that conceded that Russia has a bigger manufacturing base than Germany does. They do say that parts of Russia's industrial production, especially machine tools and those kinds of things, some of the machine tools, they missed out on the latest generation of machine tools. And it will take them a long, long time to catch up. I completely disagree. Again, the historical record about this on the country shows that where the stimulus is there. Then if a country finds that it's own machine tools, that it needs machine tools, that it can't import them, that the machine tools it has have fallen back and is prepared to put the money to improve its machine tool industry as Russia currently is doing. Then what that does is it actually enables them to leap from. They know what they could see, what the best machine tools are like in the West, in Japan, in China, by the way, China recounts something like 60% of the world market in machine tools, as I understand. They can see all of that, and they can leap from, they can jump generations and produce machine tools that are far more and usually better than what you see in the analog around the world, and then they could quickly replace, they're encouraged and motivated to replace their old machine tools and their factories with the most modern ones. As you see in the immediate industrial upgrading, that's happened in the United States, it's happened in the Soviet Union, it happened in Japan, it happened in other sorts of places. The idea that because your machine tools may be 20 years behind those of the outside world, I don't know whether that's even true, by the way, in Russia, but the idea that because of that, it will take you 20, 30 years to catch up. Anybody who again knows anything about industrial planning, engineering, science, technology, all that kind of thing, knows that that isn't so. Again, look at China. China in 1980 had no machine tool industries, or this is machine tools industries, but very backward. By already by the year 2000, they were fully up to date, just saying. Yep, they wanted to regime change Putin, start an economic war, regime change Putin, and now it's the collective west and Europe that has farmers on strike or protesting, just about in every country in Europe, the farmers are protesting. Europe is stuck pouring money into the black hole known as Zelensky. It's just pouring millions and billions into Zelensky, the industrialized, demilitarized, what a debacle. Just to quickly finish, the key mistake they made was that they didn't actually do these studies, like the one we've just seen in B&E intelligence before, because of course, the reason the Russian economy has responded in the way that it has is because it's always had that big industrial manufacturing base, and that comes with skills, it becomes with lots of engineers, lots of STEM graduates. Russia produces as many STEM graduates as the United States does, despite having a population that is only half the size. So, when you have that already in place, if the demand and the stimulus and the investment is there, you can advance very fast. They never do the research. They never want to admit these things like Russia has a high number of STEM school graduates. They believe that it's a gas station masquerading as a country, and that makes them comfortable, and that makes them happy, and that makes them feel superior, and they're fine with that. They don't want to do the research and really dig deeper into what's going on, and they'll never admit that Russia has these types of capabilities. It hurts them too much. Psychologically, they get blocked. I don't know what happens to them. They hit this wall psychologically, and they just can't get out of it. Well, that's absolutely right, but then you do get some people, but a Western military official talking to Washington Examiner. By the way, Washington Examiner, as I'm sure you know, is an absolute rhino-neocon outfit. It's one of the most hard-line rhino-neocon outfits in the United States in the business. This Western military official, who's clearly an American, by the way, their industrial capacity is, I mean, it's vast. So, there are some people who can see it, but note again that he's saying that anonymously. He's not prepared to come out and actually say that in public, because, as you rightly said, it's heresy. Just say this in public, to admit that it's not a gas station masquerading as a country, but in fact, an industrial and industrial and scientific Colossus is still, I mean, it's so heretical, they just can't compute it. That's why they continue to get this wrong. I'm going to say this. I was surprised by the February PMI figures. I thought that, you know, with all the interest rates having gone up to the extent that they had, that would actually see, you know, signs that production was falling back. I didn't expect PMI to go on rising, and that gives you a sense of the enormous momentum that now exists. Yeah, my final point is that it's interesting that the mistakes they make with the economy, they make the same mistakes with the actual war. They get stuck in the narrative, they don't want to do their research, they don't want to uncover the truth of what's really happening in Russia or what state Russia is in, whether it's the economy, whether it's their military, and they just buy into the narratives. It's almost, it's very lazy, it seems, very lazy, given the fact that you have all the information, it's out there. I mean, it's not it wouldn't be hard for a prime minister or president to have some age or some interns go through the numbers and figure out, you know, the condition of the Russian economy or the condition of the Russian military, but it's almost likely to prefer not to even go there. And so the same exact mistake with the economy is the same exact mistakes they make with the military. Yes, but you're absolutely correct. I mean, they don't want to go there. I mean, it's not that it's not as easy. But why is it laziness? Is it fear? Is it Yeah, at some at some deep level, I suspect there is a degree of fear in the sense that, you know, they're afraid that if they open the lid and look inside, they'll find the things are different from what they believe or want to believe and what everybody else around them to believe. So they don't want to, you know, lift the lift the lid off and look inside. Once upon a time, of course, in the in the Cold War, that is exactly what the US used to do. It used to lift lift up the lid and look inside. But they don't want to do that today, because today, we are in a postmodern world, as far as Western leaders are concerned. And it's not facts that matter. It's narratives. It's shaping narratives. And if the facts get in the way, you suppress the facts. And in fact, you don't want people to remind you of them. It's so weird. It really is weird because it's not like this is such a scary thing to uncover, you know, you could sit around the table as you're planning your economic war against Russia, if you're in Brussels and you're sitting around the table in Ursula of Andrew Lyons at the head of the table. And she's like, okay, we're going to sink the Russian economy. And you know, you could just be in Brussels and say, you know, I went on the internet. And you know, the Russia economy is pretty, pretty strong underneath. It has some pretty good good foundation. So maybe Ursula, we shouldn't, you know, put out 13 sanctions packages. I mean, it's not like it's that scary thing to put out there in the open, but they don't, they don't want to chat. They don't want to do that. They don't want to touch it. This is exactly right now. I think in Germany, by the way, remember, Ursula is German. I think there's a particular issue here, because of course, the Germans want to believe, have long wanted to believe that they're the industrial Colossus, you know, in Europe. They don't really want to acknowledge that the Russians are got a bigger industrial base than they have. And to the extent that things were going well in Russia, they were always telling themselves and wanted to say to themselves, it's only because we're doing them this favor of investing there and building Mercedes factories and building, you know, getting Siemens to give them gas turbines and trains and that kind of thing. And of course, if we walk away, well, they'll just fall apart. This is very much the psychology of some people in Germany. I'm sure the industrial people didn't think that. I'm sure the engineering people didn't think that. I mean, I talked to engineers in Britain and they didn't think that, but you know, Ursula, she doesn't really talk to people like that. Or if she does, and she hears that them talking that way, well, they're just saying Putin talking points. You're fired. You're fired. We will leave it there. You're a Putin stooge. Like what Habik told. Actually, yeah, we have an example of that. Like what Habik told. Man, I'm still his team. Yeah. Yeah. All right. The Doran dot locals dot com. We are on Rumble Odyssey, Bitch Shoot Telegram, Rockfin, and Twitter X and go to the Duran shop. 15% off all t-shirts. Take care. (upbeat music)