Using the April 2024 WEO projections (the July update indicates no revision for 2024 growth, and -0.3 ppts for 2025 y/y), we can see the following trajectory for Russian output, and Russia output ex-military spending.
Figure 1: Russia GDP (blue), and GDP ex-military spending (red), all in billions of 2021 roubles. Light green indicates projections. Source: for GDP, IMF World Economic Outlook, April 2024 database, and SIPRI [1], SIPRI [2].
The above calculation assumes that military spending is essentially on goods and services, so that expenditures equal production. Keep in mind that GDP does not include depreciation (which presumably, between run-down of inventory of tanks in storage, and obsolescence of equipment dependent on imported inputs, has increased).
This means the growth rate of civilian expenditures is substantially below that of GDP.
Figure 2: Year-on-Year growth rate of Russia GDP (blue), and GDP ex-military spending (red), all in billions of 2021 roubles. Light green indicates projections. Source: for GDP, IMF World Economic Outlook, April 2024 database, and SIPRI [1], SIPRI [2].
The cumulative increase in GDP in 2023 since 2021 is 2.3%, vs. 0.3% for cumulative GDP ex-military.
While the IMF and World Bank projects positive output growth for 2025, as does the MoF’s baseline scenario, the MoF’s stress scenario allows for nil growth. Gorodnichenko sees a recession, as recounted in this post.
Interesting post. Now it would be interesting to see the ratio of military spending/GDP over time.
The structure of the Russian economy is strong and absorbs shocks and sanctions
Some of the regular readers of this blog have a strong interest in evidence to support assertions. Got any?
“The report estimates that at 12 765 billion roubles (around US$140 billion), Russia’s planned military spending in 2024 would be 29 per cent higher in real terms than in 2023, representing 7.1 per cent of gross domestic product (GDP) and 35 per cent of all government expenditure. According to the most recent available draft of the budget law, while military spending increases, allocations to the budget chapter ‘National economy’ fall from around 14 per cent of total spending in 2023 to 11 per cent in 2024.” (SIPRI-2).
More guns and less butter. Something a former troll told us did not apply to Russia.
Their biggest problem is that Russia has almost maxed out (at 35%), the fraction of national spending that goes to the military. In contrast, the West have barely begun increasing their military spending. Medvedev talked about Ukraine not existing in 2034 (https://www.understandingwar.org/backgrounder/russian-offensive-campaign-assessment-july-17-2024). I have no idea how anybody in Russia could think that Russia would be able to hold out in the war for a decade. Even if Orange Jesus pulled US out of Europe – the rest of Europe has huge economic reserves and barely begun increasing military production (whereas Russia appears almost maxed out – for a lack of factory workers). Ukraine has brilliantly taken out Russia air-defense systems in the past few months and now the F16s are about to arrive. That Russian summer offensive is beginning to look like a bust.
Teamsters President Sean O’Brien Should Not Speak at the RNC
By: John Palmer, Teamster V.P. July 10, 2024
https://newpol.org/teamsters-general-president-sean-obrien-should-not-speak-at-the-republican-national-convention/
A speaking engagement at the Republican National Convention by Teamster President Sean O’Brien, regardless of the message, only normalizes and makes the most anti-union party and President I’ve seen in my lifetime seem palatable. Teamster members and leaders have the right to demand an answer to the questions: What does the General President intend to say? What does he hope to achieve from such an appearance?
Trump working hard to have a 2024 recession:
https://www.msn.com/en-us/money/markets/trump-warned-powell-not-to-lower-rates-before-the-election-markets-still-expect-a-september-cut/ar-BB1q9Qq6?ocid=msedgdhp&pc=U531&cvid=a33bfa30f0fc4370ab2f741c8aa8cf35&ei=14
‘Trump told the publication that cutting interest rates before the November election would boost the economy and President Joe Biden’s odds of victory. “It’s something that they know they shouldn’t be doing,” Trump said of the Fed.’
More proof Trump does not care about anybody except himself.
I have recently seen it estimated that military spending accounts for about a quarter of Russian GDP. Your chart suggests something closer to 13%, about half the other estimate.
I appreciate that we have limited data, of limited reliability, on Russia’s economy, so this gap isn’t all that surprising. The two different estimates do, however, suggest quite different welfare and investment results.
Macroduck: World Bank estimate here: 4.1% in 2022.
4.1% for 2022 perhaps but one of your links says this ratio will go up to 7.1% by 2024.
World Bank shows this spiking to 5.6% in 2016. Does anyone know what happened back then?
Off topic – From the August, 2024 edition of Harper’:
“Portion of U.S. voters who believe that unemployment is at a fifty-year high: 1/2”
Did Faux News rating spike this high?
The military spending is direct spending. However, I presume a good part of the civilian economy is propped up by the war as “trickle down” effects.
I was chocked to see at ISW today how much the Russian government spends on injuries and deaths. Thats no way to run a war – from a human or financial angle.
“The Russian government, presumably both at the federal and regional level, reportedly spent 1.55 to 1.8 trillion rubles ($17.5 billion to $20 billion) on Russian military personnel, comprised of monthly payments and one-time payments for signing a contract, and 1.2 trillion rubles ($13.5 billion) for injuries and deaths.[69]”