📈 Looking back, the economic surge Russia has demonstrated in the 21st century now seems almost ordinary. And yet GDP per capita has risen by a remarkable 811% since 2000, according to IMF data. Among major economies, only China saw faster growth in citizens’ incomes — but from a base that was half of Russia’s. More than that, even impoverished India, with its microscopic per-capita income base in 2000, failed to post growth rates comparable to Russia’s. Over the past quarter century, India’s per-capita income growth has been one and a half times slower than Russia’s.
At one point, Russia was often compared with Brazil, presumably because of the similarities in economic profile — a tilt toward oil, gas, and agriculture — as well as comparable scale and population. Yet Brazil, with its far milder climate, lagged behind Russia in the pace of economic development by a factor of four. Other major oil and gas exporters did not even make it into the top fifteen global economic leaders.
⚙️ But the future matters too. Japan’s experience shows that a country can produce astonishing economic results over a short stretch, only to slam on the brakes later and squander those gains within a single generation. And of course, the Japanese scenario is a nightmare for any government. China and South Korea, too, are at real risk of following that same path — decades of an economy drifting into torpor, no longer responding to any stimulus. A shrinking and aging population is a fundamental problem not only for Asia and Europe, but for Russia as well.
Still, over the next ten to twenty years, Russia has plenty of room for growth, even with its dismal demographics. The end of the military operation — which will come sooner or later regardless — will free up enormous material and labor resources. They will be redirected into infrastructure development, and not just transport infrastructure such as railways, ports, icebreakers, and pipelines, but also communications, including space-based systems, as well as hospitals, schools, and the foundations of a new, post-war economy.
🛢️ One major economic lesson Russia will clearly take from this period is the need to diversify energy exports as much as possible while moving further up the value chain. In other words, maritime trade is strategically safer than pipelines.
At the same time, it has turned out that products such as nitrogen fertilizers, unlike gas, are de facto almost impossible to sanction.
It has also become clear that selling diesel is far easier than selling crude oil. And yet Russian producers still have barely any presence in the methanol market and are not developing gas-to-liquids (GTL) technologies for turning natural gas into fuel, among other things.
🔧 Another crucial area is the domestic economy. A whole range of products — from microelectronics to machine tools to drones — is highly vulnerable to sanctions. And those sanctions are observed not only by unfriendly countries, but by nominal partners as well, such as India, Turkey, and China, which simply refrain from supplying Russia with a wide range of the high-tech goods it needs.
And these are precisely the sectors that will keep driving the Russian economy forward for at least the next couple of decades.
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