The IMF, Rubles and the Russian Economy

[Crezth]

Where we come from doesn't matter in this context. I'm a freaking Brit, and I don't need to derail the thread with factual accounts on the bunch of ways we suck and have sucked.

It's pretty simple. If you're going to moral high ground about genocide, you don't "but" the genocide you find the most excusable. Because that makes you no different from everyone else who does it.

Look, from my perspective you are all "butting" genocide all the time when you start in on half-baked notions about what "we" are going to do to save the world. Really? You're gonna save the world? With what, the UK government? Please.

As for "moral decay", I don't think it's a genius take to say "Putin bad". Look at what he does to his opposition. Look at what he's doing to term limits. You can pontificate about other countries as much as you want, and in another thread you might have a much different reception. But this is the dedicated RD thread for Russia's illegal invasion of Ukraine, and I'm (personally) way past tired of "other countries bad".

It's called critical analysis. And please stop with that "illegal invasion" nonsense. What's a legal invasion? Vietnam's invasion of Cambodia? Uh, no, not technically. The incipient ECOWAS invasion of Niger? Oh it's a coalition of nations! That means it's good, right?

Yes, other countries bad. Yes, the Red Scare is still a thing (effectively). Yes, noble West vs. evil East is a trope that keeps on being played out. But that doesn't change the reality of the invasion. It doesn't mean that it's "morally correct" to abandon Ukraine to an impossible aid scenario that'll never play out. Even putting aside the genocide apologia, China aren't going to aid Ukraine.

Which makes your answer is "eff them lol, US bad". It's . . . not a very smart answer? We both agree reality is more complicated. Any solution is going to relate to international politics by definition.

Look, it's about understanding the international perspective and taking responsibility for being a high-ranking citizen of the empire. My voice counts for more than a Ukrainian's. I'm sorry, but it does. And I am not going to use it providing implicit support to the hawks that run the biggest imperial war machine in history (interestingly: neither Russian nor Chinese). You want to say I'm giving license to Russia? What, for criticizing the notion of an incipient NATO involvement in Ukraine? I say it's the consumerist pigs who refuse to find their own moral center who keep the war machines running.


Moderator Action: Split from Ukraine War thread #7. Birdjaguar

 

[EvaDK]

Meanwhile Russia has nearly triplicated defense spendings to burn it all in Ukraine:

Russia's defence spending jumped 282% y/y to $26 bln in Jan-Feb -budget data

Russia spent 2 trillion roubles ($26 billion) on defence in January and February alone, a 282% jump on the same period a year ago, data on the budget portal showed, illustrating the spiralling costs for Moscow of its conflict in Ukraine.

www.reuters.com

And the ruble is already under a penny.

The theory about Russia exhausting the west was so amazingly dumb I don't know how people believing it has powerful enough brains to allow them breathe. It didn't work in the cold war vs the Soviet Union imagine now vs Russia. However the perception is there as you say, which is worrisome since everybody adds up to the average intellectual level.

Theoretically possible but they better get onto it. They run out of money around the end of the year.

IMFs 2023 end of year projection:



https://www.visualcapitalist.com/visualizing-the-105-trillion-world-economy-in-one-chart/

 

[red_elk]

Just in case anyone is interested, IMF actual prediction is that Russia's GDP will grow by 1.5% in 2023.
To put it into perspective, prediction for UK is +0.4%, France +0.8%, Germany -0.3%

Russian Federation and the IMF

www.imf.org

 

[Verbose]

Just in case anyone is interested, IMF actual prediction is that Russia's GDP will grow by 1.5% in 2023.
To put it into perspective, prediction for UK is +0.4%, France +0.8%, Germany -0.3%

Russian Federation and the IMF

www.imf.org

Since the IMF recirculates what figures it is provided with by the Russian government, it's not obvious this means anything.

Why Is the IMF Pushing Putin's Economic Propaganda?

Russia is pushing economic figures that don't add up. We shouldn't buy their lies

time.com

Mostly it would seem to mean the Russian government claims everything is fine. We already know it does that. Duly noted. Moving on.

 

[red_elk]

Yes, I was expecting that celebration of Russian economy's collapse will instantly change to "IMF is not really reliable source", right after my post.

 

[FriendlyFire]

Yes, I was expecting that celebration of Russian economy's collapse will instantly change to "IMF is not really reliable source", right after my post.

My dear Ivans
Your economy is growing by (check notes) 4.9%, inflation is (check notes) 3.2%
conclusion: Obviously the "west" is lying again.
Its not that hard to figure out, when the IMF based its projected growth on Russian Rosstat data.

Kremlin has boasted about Russia’s economic outlook while the central bank has predicted that the economy will grow by up to 2.5% this year, despite crippling western sanctions.
Despite the weakening rouble, Russia’s statistics agency, Rosstat, announced last week that the economy grew year on year by 4.9% in the second quarter of 2023, the first increase in 12 months.
The Consumer Price Index for Russia is 238.1 for the month of June 2023. The inflation rate year over year is 3.2%

 

[Verbose]

Yes, I was expecting that celebration of Russian economy's collapse will instantly change to "IMF is not really reliable source", right after my post.

In this the IMF is like Herodotus – can be relied on to very faithfully report what they are told.

 

[EvaDK]

If you want a neutral indicator for how a nations economy is doing, look at the performance of its currency.

The Ruble has dropped 26% in value to the Dollar the last 8 months alone.

Putin wanted China to pay for oil in Rubles to artificially prep up his own currency; China obviously told him nope, we'll pay you in Yuan. So, China is paying for Russian imports with Yuan, illustrating the future status of Russia as a Chinese vassal state.

 

[Lexicus]

Yes, I was expecting that celebration of Russian economy's collapse will instantly change to "IMF is not really reliable source", right after my post.

I guess the real question is how reliable a source you think the Russian government is.

 

[Crezth]

Since the IMF recirculates what figures it is provided with by the Russian government, it's not obvious this means anything.

Why Is the IMF Pushing Putin's Economic Propaganda?

Russia is pushing economic figures that don't add up. We shouldn't buy their lies

time.com

Mostly it would seem to mean the Russian government claims everything is fine. We already know it does that. Duly noted. Moving on.

Question, since you're an IMF projections genius - why doesn't every government claim its growth will be at least just a little higher than it actually is, since this is a market signal that will drive more investment and thus more growth? It's called "self-fulfilling prophecy." This seems, economically, like a very smart thing to do. What do you think?

 

[red_elk]

If you want a neutral indicator for how a nations economy is doing, look at the performance of its currency.

The Ruble has dropped 26% in value to the Dollar the last 8 months alone.

By this neutral indicator, Russian economy was performing exceptionally well in first half of 2022. Because rub/usd exchange rate gained roughly 40% in that period.
But as far as I remember, CFC consensus back then was that growth of ruble was a sign of Russia's imminent collapse.

 

[Zardnaar]

By this neutral indicator, Russian economy was performing exceptionally well in first half of 2022. Because rub/usd exchange rate gained roughly 40% in that period.
But as far as I remember, CFC consensus back then was that growth of ruble was a sign of Russia's imminent collapse.

It was fake growth propped up by government intervention on very low numbers traded.

Russia couldn't take those rubles and buy useful things with them.

 

[Lexicus]

Question, since you're an IMF projections genius - why doesn't every government claim its growth will be at least just a little higher than it actually is, since this is a market signal that will drive more investment and thus more growth? It's called "self-fulfilling prophecy." This seems, economically, like a very smart thing to do. What do you think?

I think most economic actors do this to some extent, but they have to balance the effect of rosy predictions with the risk of being seen as lying to investors. You can get burned a lot worse by lying and getting caught than by just giving a meh projection in the first place.

 

[Verbose]

Question, since you're an IMF projections genius - why doesn't every government claim its growth will be at least just a little higher than it actually is, since this is a market signal that will drive more investment and thus more growth? It's called "self-fulfilling prophecy." This seems, economically, like a very smart thing to do. What do you think?

Because positive effects of short-term BS-ing commercial actors are small – and short term – the mid-to-long-term effect are otoh very bad. (They tend to notice when they get wiped out from not being made aware of suppressed facts.) All kinds of important decisions are made on the basis that this information about the national economy, markets etc., are bona fide. And if it isn't, there will be hell to pay – likely for a long time. Commercial actors will take height, possibly for a long time, for the probability that this government and its agencies are just lying. (Greece still isn't quite trusted with loans on the international market. The Swedish currency "krona" is seemingly endlessly hollow as Swiss cheese, because Sweden in the 1980's pursued a high-inflation set of policies hollowing out its currency – prioritizing low unemployment instead – and 35 years later that is how the international currency market still has Sweden pegged. Once these impressions sets, it might take two or three generations of over-compensating the other way to get to over something. It's not all bad for Swedish industry – makes its exports cheap – otoh imports cost a fortune.)

Now, that might mean less in a situation where the state is in the process of taking full control of commercial activity in a national economy. Like Russia, and China. Then the government can BS everyone as much as it likes all the time, and legislate against asking questions and the like – or legislate that everyone has to do things on the basis that black is white —or just that everything belongs to the government anyway. But good luck trying to attract commercial actors and investments with that kind of reputation. "Everything within the state, nothing beyond the state" tends to be the outcome.

Mind, China is an even worse case, and currently its economy is grinding to a screeching halt – thanks to how nothing is allowed to operate beyond the control of Xi and the CCP.

And the IMF doesn't make independent analysis – it admits as much when asked about the weird Russian figures. (The extent to which Chinese fundamental economic indicators have been "massaged" are currently also a topic for debate.) It reports the figures governments provide. So crap in, crap out. However most developed market economies have a vested self-interest in these numbers being correct. If they are bad for a national economy, said national economy needs to set its house in order. However, unless you are five years old, it should be obvious why pretending things are A-OK when they are not is a bad idea. It's short term magical thinking at best.

 

[EnglishEdward]

Question, since you're an IMF projections genius - why doesn't every government claim its growth will be at least just a little higher than it actually is, since this is a market signal that will drive more investment and thus more growth? It's called "self-fulfilling prophecy." This seems, economically, like a very smart thing to do. What do you think?

A lot of governments (including the UK) do just that. The primary downside isn't so much that they discredit themselves
with investors, but that they start to believe in those rosy projections themselves which horribly distorts decision making.

 

[red_elk]

I guess the real question is how reliable a source you think the Russian government is.

Last year, when IMF predicted contraction of Russian GDP, there were no such questions.

I guess, depending on your political affiliation, reliability is either proportional or inversely proportional to the amount of predicted growth.

 

[Verbose]

By this neutral indicator, Russian economy was performing exceptionally well in first half of 2022. Because rub/usd exchange rate gained roughly 40% in that period.
But as far as I remember, CFC consensus back then was that growth of ruble was a sign of Russia's imminent collapse.

The ruble is subject to currency controls by the Russian government. As a consequence it is not a fully internationally convertible currency. This is the kind of stuff that was normal all over the world – in the 1950's... So no, it is not some kind of "neutral indicator" since the Russian government is tampering with it to high heaven.

No idea if confusion over this in Russia should be put down to relative unfamiliarity with general economic theory about these things, or not. However, we can clearly see that Russia has failed to transfer to a mature market economy, and it still a mostly state-controlled resource-extraction economy. "Upper Volta with nukes" was a bit of a slur when coined, but the way the Russian national economy is now developing is making Russia eerily similar to various African national economies struggling to overcome a colonial legacy as foils for precisely resource extraction. The real weirdness is that Russia really has managed to build the simulacra of a colonized economy, based on a state that acts like a colonial power in relation to the Russian public – and this then gets celebrated in Russia. But that is what said government decrees, so...

 

[Verbose]

Last year, when IMF predicted contraction of Russian GDP, there were no such questions.

I guess, depending on your political affiliation, reliability is either proportional or inversely proportional to the amount of predicted growth.

You have no idea how the Russian economy is really doing. No one has. Because it is being actively obscured by the Russian government. But what we can look at does not inspire confidence.

 

[Verbose]

A lot of governments (including the UK) do just that. The primary downside isn't so much that they discredit themselves
with investors, but that they start to believe in those rosy projections themselves which horribly distorts decision making.

Well, quantity is a quality of it own... degrees matter here. Also a difference between presenting rose-tinted estimations and prognostications, and cooking the books after the fact.

The former tends to taken to have been done in good faith, if misguidedly optimistic, and thus more readily forgiven. If a government gets it consistently wrong like that, its prognosis tends to just be disregarded, and everyone looks at the record of the hard figures instead.

 

[red_elk]

You have no idea how the Russian economy is really doing. No one has.

I most probably have a little more information about it than "expert economists" actively participating in this thread.
But unlike them I don't make predictions, so your comment is a bit misplaced.