Forecasts of Russian GDP, pre- and post-

From Heli Simola, BOFIT, in “War’s price tag…”, consensus forecasts from February and from September:

Source: Simola, BOFIT (October 18, 2022).

Not as bad as forecasts from end-March (see this post), but in line with those from early March (see here). Still not good.

Additional reminder that GDP is just output (equals income in national income accounting). But it’s not “welfare” (in the economic sense of aggregated utility).

A further perspective on the war’s costs can be gained by examining Russia’s public sector expenditure. There is, of course, considerable uncertainty built into these calculations as well. War-related expenditure largely falls under the category of defence spending in Russia’s federal budget. Defence spending in 2022 will be up by at least RUB 1,200 billion compared with the pre-war budgeted total. According to Russia’s provisional 2023–2025 budget, its defence spending for that period is being raised by a total of RUB 2,600 billion above the previously budgeted figure. So, since the start of the war, the country’s defence spending is being increased by at least RUB 3,700 billion (approx. USD 53 billion at this year’s official average exchange rate).

War-related expediture may also be included under the category of national security spending. Such spending is also being boosted in 2022–2025 by an overall figure of about RUB 3,700 billion above the previously budgeted level. In other words, current plans show that the war is increasing budget expenditure on defence and national security in 2022–2025 by altogether RUB 7,400 billion (USD 110 billion, or almost 6% of the 2021 GDP total). The expenditure total may even be greater than this, as not all budget spending is itemised. It is also possible that the level of spending might be raised further beyond the budgeted figure. Without the war, the Russian state could have used these funds for advancing the wellbeing of its citizens. Instead, to fund its war, the Russian state will have to cut expenditure on more beneficial matters such as road construction and science promotion. Additional defence spending may boost output in the military industry, but it will not enhance the wellbeing of the country’s citizens.


47 thoughts on “Forecasts of Russian GDP, pre- and post-

  1. pgl

    “At the start of this year, Russia’s gross domestic product (GDP) was still projected to grow by a total of about 5% in 2022–2023 (Chart 1). As a result of the war, confidence on Russian economy has collapsed. The economic sanctions imposed on Russia due to the war have isolated it from international financial markets, restricted the availability of technology products in Russia and cut the demand for Russian goods in foreign markets. The latest forecasts show that Russia’s GDP is expected to shrink by a total of 8% – 10% in the years 2022–2023. Without the war, Russia’s GDP could therefore have been as much as 15% higher in 2023. At the average 2021 exchange rate, this means a GDP loss of approximately USD 270 billion in 2023 alone.”

    Some of our US RECESSION CHEERLEADERS are also Putin poodles. I suspect these trolls will tell us no recession here but the US economy is somehow “catering”. Putin is good at one thing – disinformation.

    1. JohnH

      No doubt about it…’ the US economy is somehow “catering”’ Gourmet or cafeteria style? That is the question!

      I guess I won’t get to see how economists of a certain persuasion will react to three straight negative quarters! But I have noticed a remarkable decline in the number of posts presenting alternative measures to GDP!

      1. pgl

        I bet even Princeton Steve realizes how utterly stupid this comment is. Gee Johnny – your new BFF does not even like you.

      2. Barkley Rosser


        Huh? Atlanta Fed GDPNow current estimate for Q3 is 2.9% growth. What fantasy are you chasing on this one?

        1. pgl

          JohnH reminds me of Kudlow back in 2003 discussing employment growth. When the household survey showed the more favorable number for his political masters – then it was the most reliable. Until the next month when the payroll survey provided the more favorable number. Yea – JohnH is a master pancake chef with all of his flip flops.

  2. pgl

    “The expenditure total may even be greater than this, as not all budget spending is itemised. It is also possible that the level of spending might be raised further beyond the budgeted figure. Without the war, the Russian state could have used these funds for advancing the wellbeing of its citizens. Instead, to fund its war, the Russian state will have to cut expenditure on more beneficial matters such as road construction and science promotion. Additional defence spending may boost output in the military industry, but it will not enhance the wellbeing of the country’s citizens.”

    When the data for the rest of the decade is in – it would be interested in just how much private consumption + private investment + net exports were crowded out by Putin’s decision to commit massive and needless war crimes in Ukraine.

  3. ltr

    October 19, 2022

    Soaring food prices push UK inflation back to 40-year high

    The biggest jump in food prices since 1980 pushed British inflation back into double digits last month, matching a 40-year high in July in a new blow for households grappling with the cost-of-living crisis.

    The Office for National Statistics (ONS) said the consumer price index (CPI) increased by 10.1 percent in annual terms in September. A Reuters poll of economists had pointed to a reading of 10 percent, after a 9.9 percent rise in August.

    Food and non-alcoholic beverages prices were the biggest driver of inflation in September as they rose by 14.5 percent, the biggest jump since April 1980 according to historical modeled estimates of the CPI.

    The Consumer Prices Index including owner occupiers’ housing costs (CPIH), which is the most comprehensive measure of inflation that extends CPI to include a measure of the costs associated with owning, maintaining and living in one’s own home, known as owner occupiers’ housing costs, along with council tax, rose by 8.8 percent in the 12 months to September 2022, up from 8.6 percent in August and returning to July’s recent high, according to the ONS.

    “Today’s release highlights the danger that underlying inflation remains strong even as the economy weakens,” said Paul Dales, chief UK economist at consultancy Capital Economics.

    He pointed to rising core inflation, a measure that excludes volatile food and energy prices, which hit a new 30-year high of 6.5 percent.

  4. ltr

    October 19, 2022

    Bread Prices Skyrocket as Inflation Grips Europe
    The elevated costs of flour, nuts, eggs and even electricity are forcing bakers to increase their prices and cut their production.
    By Liz Alderman

    Since Russia’s invasion of Ukraine, the price of the wheat that Julien Bourgeois grinds for boulangeries at his family’s flour mill in central France has increased more than 30 percent. The bill for the electricity needed to run the mill has tripled. Even the price of paper used for flour sacks has hit the stratosphere.

    All of which are driving up the price of a loaf of bread.

    “Inflation is brutally high,” said Mr. Bourgeois, inspecting the mill’s mammoth crushers as they ground wheat into flour. He has urged the 1,000 bakeries that his company, Moulins Bourgeois, supplies to mark up the iconic French baguette by 10 cents, from a current range of one euro to €1.30, to offset the higher costs that he has had to pass along.

    “Consumers can afford to pay more for now, but prices will keep rising,” Mr. Bourgeois said. “It’s worrisome.” In France, where baguettes already cost over 8 percent more than they did a year ago, he added, “we remember that the revolution started over the price of bread.”

    As inflation continues to flare across Europe, few matters are causing more concern than the cost of a basic loaf. Prices for the most essential food staple have never been higher, and are now up nearly 19 percent from a year ago, the fastest rise on record, Eurostat, Europe’s statistics agency, said in a report released Wednesday….

    1. JohnH

      I guess that Europeans can eat cake instead of bread. Better yet, put them on a diet that produces a lot of methane!

      1. Macroduck

        Johnny, you’ve finally come out of the close!. No more pretending to understand economics (or international relations or math or history…). Just a small-minded brat, nothing to contribute, and no more hiding the fact. Good for you.

  5. pgl

    Republicans only pretend to want fiscal discipline. Republicans only pretend to want to lower inflation. Of course their agenda is more massive tax cuts for the rich which would assure that US inflation will rise and force the FED to raise interest rates even more. Their agenda is anti-growth so any talk about supply-side economics is just stupid.

    Republicans plan to push to extend key parts of President Donald Trump’s tax cuts if they take control of Congress in this fall’s elections, aiming to force President Biden to codify trillions of dollars worth of lower taxes touted by his predecessor. With Democrats likely to lose control of the House of Representatives and possibly the Senate, Republicans are preparing to advance legislation that would make permanent the GOP’s 2017 changes to the tax rates paid by individuals. Republican officials will also push for scrapping some of the law’s specific tax increases on corporations that were designed to offset the cost of their enormous overall cut to the corporate tax rate.

    1. Barkley Rosser


      Something a number of observers are noting is that the Dems in Congress must NOW move to end the debt ceiling while they have the votes to do it. Otherwise, assuming GOP takes at least the House, they are likely to crash the world economy with glee by bringing about a debt default by the US.

      1. pgl

        Truss did serious damage to the UK economy simply by proposing a massive tax cut for the rich. McCarthy wants the same fiscal irresponsibility here. So maybe they will not need a debt default is they can pass their little tax cut.

        1. Barkley Rosser


          Well, as long as Biden is still POTUS, he can veto their tax cut, and, no, they will not get such control of Congress they can overrule a veto of his. But the debt ceiling, that is a different and much more serious matter, and I see reports that somehow Biden is dismissing it, although hopefully if indeed the GOP takes the House, he will reconsider and support a lame duck move to end the damned thing.

  6. ltr

    October 19, 2022

    Consumer Giants Keep Raising Prices as Profits Come Under Pressure
    Nestlé and Procter & Gamble reported resilient earnings as they brought in more money from selling fewer goods.
    By Isabella Simonetti

    Nestlé and Procter & Gamble, two of the world’s largest consumer-facing companies, continued to raise prices last quarter, generating higher sales even as shoppers cut back on the amount of cereal, yogurt, detergent and other goods they bought as inflation squeezed their wallets, the companies reported on Wednesday. Executives also said that the prices would remain high in the coming quarters.

    Nestlé, the Swiss conglomerate that owns Cheerios and Kit Kat, raised prices by 9.5 percent in the third quarter versus the same period last year, up from a 7.7 percent increase in the previous quarter. The effect of accelerating prices was reflected in a small decline in the volume of goods sold in its latest quarter, the first fall in years.

    “The challenging economic environment is a concern for many people and is impacting their purchasing power,” Mark Schneider, Nestlé’s chief executive, said in a statement. The company said that it expected its profit margin for this year to come in at 17 percent, down from 17.4 percent the year before. It said that revenue for the year would rise by 8 percent, slightly higher than previously predicted.

    Procter & Gamble, the maker of Crest toothpaste and Charmin toilet paper, raised prices by 9 percent in its latest quarter, while sales volumes fell by 3 percent. The company’s third-quarter profit was just under $4 billion, about 4 percent lower than the previous year.

    The company, which is based in Cincinnati, said that profit growth for its current fiscal year was likely to be close to flat, held back by $600 million in extra costs it had not expected last quarter resulting from higher commodity and freight costs and the strong dollar.

    Procter & Gamble’s chief financial officer, Andre Schulten, told analysts that when it came to the path of future sales, “we continue to believe that the majority of that growth will be price driven with a negative volume component, as you would expect given the inflationary pressure.” …

    1. pgl

      I checked the 10-K filing for fiscal year ended 6/30/2022 that Procter & Gamble’s chief financial officer, Andre Schulten, had to sign off on. Andre should admit that P&G sales past $80 billion for the year and its operating margin exceeded 22%. Yea – the profit margin for the previous year was higher but its margin is obscenely high regardless.

      1. ltr

        P&G sales passed $80 billion for the year and its operating margin exceeded 22%….

        [ Critically important finding, speaking to the concentration in consumer goods production and retailing. ]

    2. pgl

      Procter & Gamble, the maker of Crest toothpaste and Charmin toilet paper, raised prices by 9 percent in its latest quarter, while sales volumes fell by 3 percent. The company’s third-quarter profit was just under $4 billion, about 4 percent lower than the previous year.

      Sales volume means quantity of goods not nominal sales revenue which rose. And yea profits were slightly down from a year where the profit margin was incredibly high. The spin here reminds me of the disinformation we routinely get from our Usual Suspects.

  7. pgl

    Why are MAGA Republicans supporting Hershel Walker. This oped nails it:

    Walker has been vocally in favor of extremely restrictive abortion laws that would radically limit women’s rights and opportunities and require that we risk our lives to undergo unwanted, radical and permanent changes to our bodies, our health and our lives. This is a profound violation – it is telling women and girls everywhere, “your body does not belong to you, and you do not get to decide what happens to it.” It’s the same message when abusive men attack women: I control you, you do not have the right to safety in your own body, your bodily autonomy doesn’t exist.

    It’s that kind of state control over women – and really, traditional male control over women – that pro-life Republicans support (yes, the women among them, too). At the ideological core isn’t that abortion is murder; it’s that abortion gives women the fuller ability to live their lives outside of male control and outside of traditional roles and expectations, which in turn impinges on men’s abilities to behave with impunity.

    Herschel Walker is a man who has behaved with impunity: He has not lived up to what conservatives themselves claim is righteous male behavior, instead having affairs and children with women who are not his wife. He lies whenever it’s convenient and especially to puff himself up. He stands accused of abusing women and terrorizing his family; he stands accused of paying for a woman’s abortion. None of it seems to be a problem for Republicans. Instead, this kind of hypocrisy, entitlement and misogyny seems to be part of the appeal.

    1. Barkley Rosser

      I see reports of massive early voting in GA. But I have not seen a breakdown of where that is hsppening or which side is benefiting from this, if either.

  8. ltr

    October 19, 2022

    E.V. Bonanza Flows to Red States That Denounce Biden Climate Policies
    No Republican in Congress voted for the Inflation Reduction Act. But their districts and states will greatly benefit from the investments spurred by the law.
    By Jack Ewing

    Democrats pushed through climate change legislation this year that earmarked tens of billions of dollars to create a U.S. supply chain for electric vehicles. Republicans and the states they represent are poised to cash in on much of the political and economic windfall.

    For Republican members of Congress, none of whom voted for the climate law, it’s the best of both worlds. They can call the spending wasteful, while benefiting politically from the jobs and money that car and battery factories bring to their districts.

    Even before President Biden signed the Inflation Reduction Act in August, billions of dollars were flooding into electric-car and battery factories. The legislation is expected to supercharge the investment, a large chunk of which is flowing to states whose representatives are often skeptical of climate change and have close ties to coal, oil and natural gas businesses.

    States that voted for former President Donald J. Trump will receive most of the grants announced by the White House on Wednesday to promote battery and raw material production in the United States, part of a broad effort to end dependence on China. Companies in 12 states will receive grants totaling $2.8 billion; all but four of those states voted for Mr. Trump in 2020. The grants were authorized by a bipartisan infrastructure law that Mr. Biden signed in November.

    Likewise, five of the 10 states that will receive the most private investment related to electric vehicles voted for Mr. Trump, according to data compiled by the Zero Emission Transportation Association, an industry group. They include Tennessee, which is expected to receive $18 billion, more than any other state.

    Ideology has not prevented red-state politicians from trumpeting green investments in their districts. The disconnect was on display in Spartanburg, S.C., on Wednesday, when BMW announced plans to upgrade a factory to produce electric vehicles, and to build a new plant nearby to assemble batteries.

    Among the South Carolina Republicans on hand to celebrate the $1.7 billion investment was Gov. Henry McMaster, who has called for abolishing the Environmental Protection Agency, yet this month appointed an electric vehicle coordinator to encourage companies to invest in the state.

    “The road to the future is here,” Mr. McMaster said in prepared remarks on Wednesday. “And I applaud BMW on helping lead the way.” …

    1. pgl

      The financials for Bharat Petroleum. In case you are not used to reporting in India’s currency, this company sells over $50 billion of products per year whereas the revenue of the other refinery is just over $60 billion per year. Once they pay for oil, conversion costs, excise taxes, etc. their profit margins are rather modest. Of course refineries rarely have high profit margins.

      1. Barkley Rosser

        But I thought the Indians along with the Chinese were getting cut rate deals on Russian crude. That would presumably help the finances of the Indian refiners. Frankly, I so not know what is going on with all this, although I would welcome the Indians reducing purchases of Russian oil, for whatever reason.

  9. pgl

    Judge Michael Luttig, who previously testified to the House Select Committee investigating the Jan. 6 attack, joined a case being heard at the Supreme Court in December. Moore v. Harper is a lawsuit about the so-called “Independent State Legislature Theory,” which would give power to state legislatures to decide elections. “The former judge is a surprising co-counsel to Neal Katyal, the well-known Supreme Court litigator.” said the report. “Katyal is a counsel of record in the case for several respondents opposing the far-right groups, including Common Cause and the North Carolina League of Conservation Voters.” Luttig told the New Yorker he sees Moore v. Harper as “without question the most significant case in the history of our nation for American democracy. Legally, it’s the whole ballgame.”

    Luttig is a principled conservative – a rare breed these days.

  10. ltr

    October 19, 2022

    Chinese mainland records 247 new confirmed COVID-19 cases

    The Chinese mainland recorded 247 confirmed COVID-19 cases on Tuesday, with 204 attributed to local transmissions and 43 from overseas, data from the National Health Commission showed on Wednesday.

    A total of 749 asymptomatic cases were also recorded on Tuesday, and 15,680 asymptomatic patients remain under medical observation.

    The cumulative number of confirmed cases on the Chinese mainland is 256,515, with the death toll from COVID-19 standing at 5,226.

    Chinese mainland new locally transmitted cases

    Chinese mainland new imported cases

    Chinese mainland new asymptomatic cases

    1. ltr

      October 18, 2022



      Cases ( 98,907,747)
      Deaths ( 1,091,086)


      Cases ( 44,633,961)
      Deaths ( 528,913)


      Cases ( 36,355,694)
      Deaths ( 155,081)


      Cases ( 34,888,963)
      Deaths ( 151,877)


      Cases ( 23,798,793)
      Deaths ( 191,681)


      Cases ( 7,103,339)
      Deaths ( 330,279)


      Cases ( 4,293,273)
      Deaths ( 45,689)


      Cases ( 256,268)
      Deaths ( 5,226)

  11. Ivan

    The recent mobilization will have some serious effects on the function of Russian society. Males in prime working age are disappearing either because they are drafted or hiding/fleeing from the draft. What happens when someone who is essential for your operation – just disappears one day. What happens when the lights go out in Moscow and the only guy who knows how to fix it was just killed in Ukraine?

    The chaos and stupidity of the Russian mobilization could be a big drain on their economy.

    1. Macroduck

      That’s 300,000 conscripts (or more – that number was just made up) + 750,000 new expatriots (old figure, almost certainly higher now). So conscripts plus expats amount to over a million working-age Russians no longer in the civilian workforce. Total employment in Russia over the pasr 12 months has averaged around 72 million – one million is about 1.4% of that, though that’s going to be on the high end of the real impact because some of the missing “workers” were students or (a very few) unemployed. So take another 1% out of GDP on top of the accumulated other damage. Then add to that the disruption of the sudden simultaneous quitting of 1% of the workforce.


      1. pgl

        That is only a partial estimate of the damage to the private sector as these soldiers will need weapons, ammo, food, and logistics. The amount of crowding-out of the private sector is going to be massive if this stupid invasion continues.

  12. rsm

    《There is, of course, considerable uncertainty built into these calculations as well. 》

    Plus-or-minus 100%, or 1000%?

  13. pgl

    Kevin Drum has an interesting discussion based on the NYFED’s Global Supply Chain Pressure Index

    Global Supply Chain Pressure Index (GSCPI) – Our index integrates transportation cost data and manufacturing indicators to provide a gauge of global supply chain conditions.
    Supply chain disruptions have become a major challenge for the global economy since the start of the COVID-19 pandemic. Assessing the intensity of these issues has also posed a challenge, as conventional measures tend to focus on specific dimensions of global supply chains.
    Our goal in constructing the Global Supply Chain Pressure Index (GSCPI) was to develop a parsimonious measure of global supply chain pressures that could be used to gauge the importance of supply constraints with respect to economic outcomes. Our research indicates, for example, that changes in the GSCPI are associated with goods and producer price inflation in the United States and the euro area, both during the pandemic period and stretching back to 1997 (the starting point of our data set).

    Capitalism worked fine. Supply chains were astonishingly resilient and shortages were mostly temporary and limited. What’s more, after the big Omicron surge passed, it’s taken only about six months for supply chain pressure to drop back to 2018 levels, on its way to zero within a few more weeks. Life is pretty good, and it would be better still if everyone—*cough* Jerome Powell *cough*—would quit panicking about things.

    It does seem Kevin is dismissing the notion that excessive aggregate demand is the main reason for recent inflation.

    1. Barkley Rosser


      But if supply chain problems are disappearing, why is inflation remaining so high in so many nations, in some of that such as UK, getting even worse?

      1. pgl

        I’m not totaling dismissing the notion aggregate demand plays a role. Just the claim it is the only factor. When one decides to go full blown Reagan tax cuts ala a 1981 redux, markets respond.

  14. ltr

    October 20, 2022

    A Fed President Spoke at an Invite-Only, Off-the-Record Bank Client Event
    James Bullard, who leads the Federal Reserve Bank of St. Louis, appeared at a Citigroup forum last week in Washington. Reporters were not invited.
    By Jeanna Smialek

    James Bullard, the president of the Federal Reserve Bank of St. Louis, spoke last Friday at an off-the-record, invitation-only forum held by Citigroup, and open to clients, on the sidelines of the World Bank and International Monetary Fund’s annual meetings in Washington.

    Mr. Bullard’s remarks touched on both monetary policy and issues of financial stability during a tumultuous week in the global economy. It was the kind of speaking event that the news media would typically be able to attend given the potential for market-moving news, but Mr. Bullard and his staff did not alert reporters….

  15. Gregory Bott

    The Baltic(Aryan decedent) people in north/west Russia are now under martial law. Many are fleeing back west. Its like when your stupid 25 year old sister comes to your house to whine about her awful crazy boyfriend…………………uh, break up idiot.

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