The Duran Podcast
Russian economy continues to surge
All right, Alexander, let's talk about the Russian economy because we have gotten a lot of news about the Russian economy. Putin spoke about the Russian economy at the St. Petersburg International Economic Forum. The Russian finance ministers spoke about not only the Russian economy, but also about bricks and creating a settlement currency. He spoke about that as well. And we had-- I believe it was the World Bank report that came out, which said that Russia is now the fourth largest economy in terms of purchasing power. It has overtaken Japan, and it is right behind India. And the big EU powers, not in the top five. That must really piss them off. Bet, anyway, what are your thoughts on-- Yeah, I'll let this start-- About the Russian economy. Yeah, let's start with the World Bank. The World Bank's reassessment of its figures. By the way, this has come as such a big shock that I noticed that no part of the British media, for example, is reporting this. There's this sort of complete silence. And I got quite a little push back when I first mentioned this. And people were saying this is really what the World Bank can be saying. And in fact, we are starting to see the announcements and the statements from the World Bank. Basically, their statisticians have been revisiting the topic of economies. Now, the thing to always understand is that when people look at GDP figures, they're not necessarily-- they're not exactly comparing economies. They're comparing sets of statistics about economies. This is always the fact which people don't quite understand. And you can calculate GDP all sorts of ways. You can do that using nominal figures. So you can convert the ruble into dollars. And say, this is the sort of prices of things in rubles. And they convert this way into dollars. And then you get a figure like the one which the West always works with, that Russia has an economy of just $2 trillion. It's a very small economy. Less than a tenth, significantly less than a tenth, the size of that of the US. The World Bank and the IMF don't do that. They don't like that. They've always said that this completely misrepresents the true weight of economies. What you've got to do is you've got to look at the pricing system and the economic activity within the country based on its own levels of pricing. And if you do that, you arrive at purchasing power parity. You have to adjust prices for what they would be like. In other economies, you don't expect, for example, a big Mac is the famous comparison in Russia to cost the same as it does in the United States. And if you do that, you can then get a much more accurate idea of the weight of an economy. And the World Bank has just been doing this. And they've come up with some very interesting conclusions. They've now decided that Russia isn't the sixth biggest economy, as it people were saying a year ago, or the fifth biggest economy, as they were saying as recently as February when Russia, according to purchasing power parity figures, at that time provided by the World Bank, overtook Germany. They're saying that Russia actually overtook Japan before 2021 and has been the fourth biggest economy for some time. And they've upgraded the size of its economy from 5.7 trillion to 6.45 trillion. A very, very big jump since their last calculations. But what people are able looking is that they are also saying that around 40% of the Russian economy operates beyond their ability statistically to capture. Now, a lot of people are saying that this, you know, is talking about black markets and things of that kind. It doesn't. It just means that the Russian economy is very complex, very large, and especially since so much of it is now taking place using mechanisms, payment mechanisms of things of that kind, which are outside the ability of the Western powers, including the World Bank to monitor, around 40% of the Russian economy is not being captured by these statistics. Now, if you add that up, if you factor that in, then you're arriving at a figure for the true size of the Russian economy of around 9 to 10 trillion dollars, at which point it becomes around 35% the size of the United States, roughly, well, more 35%, 36%, 37% the size of the US. Much bigger than Japan's, far bigger than Germany's. And that definitely and convincingly places it amongst the top four. In fact, quite close to the Indian economy-- well, not close, but within reach of the Indian economy, which has a purchasing power GDP of around 14 trillion dollars. But obviously, with a very, very much bigger population, 10 times bigger. So this is what we on the Duran have been saying for years. This is what I have been saying for years, that the true size of the Russian economy-- and by the way, the true size of Russia's economic growth rate has been massively underestimated for a very, very long time. That Russia's economy is much bigger than people believed, and that its growth rates almost certainly are bigger than even the Russians themselves have been reporting. Now, that brings us, by the way, to the reasons why we have this failure in the economics war. Because when the West launched its economic war against Russia back in February 2022, they thought that they were dealing with an economy that was $2 trillion in size, because that's what they all tell themselves. They all base it all on Nomin or GDP, the simple conversion of rubles into dollars of what you never found. They thought they were dealing with a $2 trillion economy. They were actually dealing with an economy that was five times bigger, which is far greater if resources than they could possibly have imagined. And that was the single biggest miscalculation that we have seen since the Second World War. It was staring them in the face. That's why they lost the economics war. And that was the big turning point in the entire project Ukraine, the fact that the West Economic War, that's when it was lights out for the collective West. Absolutely, Putin said as much during the St. Petersburg International, the economic forum. I mean, he talked about the Russian economy, 5% growth, 5.4% growth in the first quarter of 2024. A number that it appeared, not even Putin, had expected. No, they didn't. Now, that is not without its problems. The central bank, Nabulina, has come out. And she's made comments about this. She says that growth is surpassing the central banks' expectations. So we have a massive investment search. And on the back of that, there's also a big increase in real wages, I mean, real incomes in Russia, arising very, very fast. That's creating demand growth, which, even with the huge surge in industrial production, manufacturing production, manufacturing production, which is not, by the way, simply concentrated on military production, either. I wanted to just repeat that point, because I made it many times. Anyway, with this big surge in demand and investment surge, there are strong signs of an economy that's overheating. And this is why we are probably seeing a real inflation rate in Russia at the moment of perhaps around 5% to 6%. The annualized figure is higher. It's around 8%. But that compares the situation with prices today with what they were a year ago, when there was a great deal of price suppression, because the central bank had pursued a very, very tough monetary policy. If you remember, after 2022, if you are looking at the real inflation rate, if you're comparing prices from month to month and taking as your baseline the situation that it was with prices in the Russian economy, in the autumn, you're probably looking at an inflation rate of around 5% to 6%. Which the central bank thinks is too high, and I think they're right. So I think that they're going to keep money-- they're going to try and tighten up monetary policy. And they're going to try and slow growth a little. But let me say again, growth figures for Russia have almost certainly been wrong for quite a long time now. If you've been looking at growth numbers, that the Russians themselves have been supplying, which have been also based, I think, on distorted GDP figures. Because this is the problem. The Russians have themselves been using nominal GDP growth, not nominal GDP, as the statistical basis for many of their growth calculations. They've been showing growth of around 2%. Sometimes a bit less, sometimes a bit more, for quite a few years now. Whereas the reality is we're probably getting growth of well over 3%, and probably over 4% since last year. And that explains something, which visitors who go to Russia notice, which is that every year, the situation gets better. The country looks more prosperous. It looks richer. And the reason it's looking richer, from year to year is because the true growth rate is higher, again, than what many people have thought. Now, again, this is an enormous subject. It requires an awful lot more explanation that we can provide in a programme like this. But we go back to the essential point. This is a very big economy. It is an economy that is very well resourced. It's now flying. It's flying, perhaps, a bit too high. It has to be brought down a little. But there's every reason to think that it will continue this industrial and investment search. And this almost certainly now is for the long term. We could easily see growth settle between 45% over the course of the next few years. I don't think this is an overestimate, far-fetched, as that might seem, to some people. Yeah, there was an interview between Tucker Carlson and a bouquille of El Salvador. And he commented on the sanctions against Russia. And he said Russia is too big a country to sanction. And it has everything. It has every resource. It was like this was a crazy idea. It was stupid from the get-go. And, obviously, it hasn't worked. So, bouquille, he knew this was going to be a failure. The collective West leaders did not, anyway. No, because-- Can I just say, again, the problem is, again, they got themselves trapped into their own narrative. They've endlessly-- they only look at nominal GDP, which flat is there. Makes their economies look bigger than they really are. Relative-- they don't look at the actual weight of an economy. So they assume the Russian economy was only a fifth its size. And this is, by the way, where the gas station masquerading as a country idea has come from. Because, of course, the most visible part of the Russian economy, in terms of its external trade, has been its oil and gas exports. And if you price those in dollars, and you can do that because the price of oil and the price of gas is an internationally traded price. And then, project them onto an economy whose size you are massively underestimating, because you are not pricing things in Russia, getting value costs within Russia, correct, that you're going to get a far bigger estimate of the proportionate size of the oil and gas industry as part of the overall Russian economy. So that it actually has. You probably think that it's around 40%, where it's probably around 10% or even less. So there is one big problem with the Russia economy going forward. And this was also addressed at the St. Petersburg Forum. And that has to do with connected to the economy. It has to do with demographics. And you have this constant debate about the demographics of Russia. And the fact that the economy is ramping up so quickly, it needs people. It needs people, and Russia has to figure out ways to either create more people or bring in more people, which brings a whole nother set of challenges and problems. So what are your thoughts there? And this was addressed in detail a couple of days ago. Absolutely. And this is a problem. Absolutely. This explains, by the way, why we are seeing signs of overheating in the sense that the economy wants to surge faster. These are the physical parts of the economy want to surge faster. There's plenty of money now to invest. There's a lot of pent up demand. But there isn't that reserve army of people underpaid or low paid people working in the fields and the farms who, in other countries which have experienced similar investment boons, would come and work in the factories and who would increase output in order to satisfy that demand. Russia doesn't have that, because it's had low demographic situation ever since the Soviet collapse. And it is their major problem. It is the fundamental limiting factor to their economic growth. And it is politically a very, very difficult problem. On the one hand, the logical thing-- and I've been discussed this before-- is to import workers to bring in gusta-bita from Central Asia. Southeast Asia, perhaps to some extent. Places like Turkey and Iran. I think sooner or later, the government is going to have to accept that that has to happen. But of course, as in every country, that is a politically very controversial thing to do. Putin is talking about automation of production. And you could do a fair amount there. I mean, that's where the investment helps you. You can automate production. You can have many more machine tools. At the moment, you have to import those machine tools, mostly from China. But you can do that. You can build more machine tools yourself. But that takes time. I mean, it's not going to result in an immediate dramatic solution to your underlying labor shortage problem. Or you can increase families. You can persuade people to have more children, which is very much the line that the current government is taking. I mean, they've looked at what's happened in Hungary. They've seen how successful all bans policies on this has been. And they're going to do that. They were fairly successful about 10 years ago and increased in first stopping the decline in the Russian population and then increasing it. But then things began to tell off again. Anyway, they want to do that. And again, experience shows that this is successful. But bear in mind, with children today having to go to school and then want to usually take higher education. It's 18 to 20 years before any children born today are going to join the workforce. So you have to get through that period, even if you're able to increase families. I think that sooner or later, however politically difficult it is, the Russian government is going to have to make a decision to import labor from abroad, probably from places like Central Asia and Iran, politically difficult as it is to do. I think they're going to want to make sure that obtaining citizenship for these people is not going to be quite as straightforward as it is, well, obviously not as it is in the United States. And they'll want to make sure that this is a carefully controlled and regulated process. But it's something that they're going to have to make a choice about. Either they do that or they accept that growth going forwards will have to be reduced significantly, simply because of the lack of workers they have. For obvious reasons, by the way, it's not something that Putin himself likes to talk about. He wants to focus on the automation and increase a family's aspect because, as I said, importing workers is no more popular in Russia than it is in most many other countries. But as I said, I think in the end, that is where they're going to go. They're going to have to accomination, obviously. Yeah, all you're going to have to do a combination of all of those things. And this being Russia, they'll do it in a very planned and controlled way. And they're going to make sure that it doesn't get out of control, as it has in some places. All right, we will end the video there, the durand.levels.com. We are at Rumble Odyssey, Bitchewed Telegram, Rockfin, and TwitterX, and go to the Durand shop. Football24, pick up some football merch. Take care. [MUSIC PLAYING] [MUSIC PLAYING] [MUSIC PLAYING] [MUSIC PLAYING] (upbeat music)