New Catallaxy

Is the Russian economy really the size of Spain’s?

https://twitter.com/RnaudBertrand/status/1513005692986175498

The above is a great short thread on the ‘tiny Russian economy’ meme doing the rounds a few weeks back:

Arnaud Bertrand
@RnaudBertrand
·
40m
Replying to
@RnaudBertrand
To him “the war made us realize that the Russian economy is considerably more important than we thought”

He says that a big reason for this misjudgment is exchange rates.

If you compare Russia’s GDP by converting from rubles to $, you indeed get an economy the size of Spain’s.
Tip
Arnaud Bertrand
@RnaudBertrand
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39m
However this is the worst possible way of comparing the size of economies.

A slightly more accurate way is to adjust for PPP (purchasing power parity: https://investopedia.com/updates/purchasing-power-parity-ppp/)

When you do so, you already realize that Russia’s economy is actually more like the size of Germany’s.
investopedia.com
What Is Purchasing Power Parity (PPP)?
Purchasing power parity (PPP) is an economic theory that compares different the currencies of different countries through a basket of goods approach.
Tip
Arnaud Bertrand
@RnaudBertrand
·
40m
BUT you also need to take something else into account: “What is the share of the service sector versus the share of the commodities & industrial sector?”

To Sapir the service sector is today vastly overvalued in the world compared with the industrial sector and commodities.
Tip
Arnaud Bertrand
@RnaudBertrand
·
39m
He says that when you adjust for this Russia’s economy is vastly bigger than Germany’s.

His estimate is that Russia represents in fact maybe “5% or 6% of the world’s economy”, almost double the size it’s normally estimated at on a PPP basis (https://statista.com/statistics/271379/russias-share-of-global-gross-domestic-product-gdp/)

Addendum:

Here is a graph comparing Russian Federation to Australia, France, Germany, Italy, Spain, and United Kingdom:

dover0beach

25 responses to “Is the Russian economy really the size of Spain’s?”

  1. Tony Taylor Avatar
    Tony Taylor

    Is it really (roughly) the size of Straya’s?

  2. dover0beach Avatar
    dover0beach

    No, according to this, straya’s is a third of Russian Federation.

    2
  3. Frogger Avatar
    Frogger

    Yeah, I recall reading somewhere about a year ago that someone had calculated it at around the 5th largest economy in terms of PPP. Economies the size of the netherlands or germany for that matter as some pronounce generally don’t go around buidling strategic nuke and hunter killer subs as well as complex hypersonic and ballistic missile systems, space launch infrastructurte amongst other advanced military paraphernalia. Costs are controlled via its own military industrial complexes, if i recall correctly, via vertically integrated mostly state owned enterprises

    6
  4. John H. Avatar
    John H.

    Misses the key point of the discussion. The problem for Russia is attempting to maintain such a large military complex relative to its economy. Russia’s economy vastly bigger than Germany? If that is true than the corruption in Russia is much larger than even I imagined. For the average Gunther life vastly better than the average Ivan. Russia has a huge economy and nearly all of it lies in the hands of Putin and his crony mates.

    3
  5. Old bloke Avatar
    Old bloke

    Is the Russian economy really the size of Spain’s?

    Not an important question, does Russia have more nukes than Spain?

    4
  6. dover0beach Avatar
    dover0beach

    Misses the key point of the discussion. The problem for Russia is attempting to maintain such a large military complex relative to its economy.

    You’re not going to adequately address your point if, as others have done, we begin with the background claim that Russia’s economy is the size of a small Euro country.

    BTW, I don’t mean to be prickly, but how can I miss the point of a question I myself ask and which is directly addressed in the body of the post?

    10
  7. Botswana O'Hooligan Avatar
    Botswana O’Hooligan

    The Rouble used to just about level peg with the USD but that all changed and after perestroika and it eventually went to 2500 R to the USD. The Federation (read Banks) simply chopped the two zero’s off so it was 25 R to the USD but unlike us as an example where our dollar rises and falls against the USD but doesn’t noticeably affect our domestic purchasing power broadly speaking, it did in Russia because they did it domestically and people lost 100th of their worth. Bastards.

  8. Keith Forwheels Avatar
    Keith Forwheels

    Australians seem to have become in equal parts incurious, credulous & deranged.

    Reading comments in various places I have wondered to myself how much is an attempt to control and influence discourse, how much is genuinely believed, how much is simple jealousy, and how much is bigotry.

    Whichever the case, as a nation we are a long way down the darkly lit road to being mugged by reality if these simplistic modes of thought persist.

    Russia is not a trivial nation. Russians are not stupid people. Think what you will of the history of how we have arrived at this point, or of Mr Putin. But do not make the fatal mistake of underestimating either the capacity or the resolve of the Russian nation.

    25
  9. Bruce of Newcastle Avatar
    Bruce of Newcastle

    I always like that the wiki says:

    Russia 1,647,568 million
    Australia 1,610,556 million

    I think that says (a) Russia fights well above their weight and (b) we are expert at wasting money.

    5
  10. GreyRanga Avatar
    GreyRanga

    Purchasing power is everything. I’ve been looking at buying some 380mm 6 pot racing brakes. Don’t even think about buying them in Australia, rip off capital of the world. Import them from US? Nearly $4k plus duty in Oz. Found a place in Malaysia selling them fo less than half. Not knock offs. The US sells a lot of performance parts there cheap. Australians have accepted being ripped off for so long they don’t know the difference. Australians get their money too easily and then waste it paying every man and his dog to drive the flashed 4WD around.

    10
  11. Ed Case Avatar
    Ed Case

    AzovStal Works could be bigger than the Economy of Spain.
    The bottom line is that Australia gets told a lotta lies about how important we are, what our military capabilities are, it never stops.
    Here’s an example of what happens when a Minister gets too close to the truth:
    Tony Abbott’s Defence Minister told a Senate Committee that the Australian Shipbuilding Corporation couldn’t build a Canoe.
    Sure, it was a throwaway line, but …
    David Johnston retired from Politics a few hours later.

    4
  12. 132andBush Avatar
    132andBush

    To Sapir the service sector is today vastly overvalued in the world compared with the industrial sector and commodities.

    So everyone becoming accountants and counting each others’ money is not the way to have a seriously strong economy?

    I must say I’m a bit shocked to read this.

    15
  13. Entropy Avatar
    Entropy

    isn’t this like the big mac index?

  14. Chris M Avatar
    Chris M

    The next billionaire oligarch will be a scrap metal merchant in Ukraine.

    1
  15. C.L. Avatar
    C.L.

    Australians seem to have become in equal parts incurious, credulous & deranged.

    Reading comments in various places I have wondered to myself how much is an attempt to control and influence discourse, how much is genuinely believed, how much is simple jealousy, and how much is bigotry.

    Whichever the case, as a nation we are a long way down the darkly lit road to being mugged by reality if these simplistic modes of thought persist.

    Russia is not a trivial nation. Russians are not stupid people. Think what you will of the history of how we have arrived at this point, or of Mr Putin. But do not make the fatal mistake of underestimating either the capacity or the resolve of the Russian nation.

    Great observation, Keith. I’ve read the comments threads of several Ukraine war articles at The Australian and 99 per cent of them are totally aligned with official state propaganda. Virtually every commentator, newspaper and government in the world is now advocating endless war in Ukraine.

    The war and the killing are disgusting. Where are the peacekeepers?

    Personally, I’m now going to move away from emphasising the provocations and idiocies that brought on the conflict – because there is a point at which doing so is understandably read by some as an apologia for Russia; being wronged doesn’t give a country the right to kill thousands of civilians. Putin may be the enemy of my enemies but he isn’t my friend.

    It’s almost impossible to dispassionately discuss this war living in comfort in Australia – and it is equally impossible to agree with a crazed, primed mob whose very gullibility is encouraging Western politicians to go on backing war. The Ukraine war has become a doppelganger phenomenon to the pandemic, in other words; there is no room for reason.

    20
  16. Roger Avatar
    Roger

    …it is equally impossible to agree with a crazed, primed mob whose very gullibility is encouraging Western politicians to go on backing war.

    The political-media establishment is the crazed mob.

    5
  17. Kneel Avatar
    Kneel

    “The Ukraine war has become a doppelganger phenomenon to the pandemic, in other words; there is no room for reason.”

    How else can they pivot away from the economic disaster of lockdowns etc that they caused?
    They need a distraction.
    War somewhere else is a very good distraction – especially when everywhere else that made the same mistakes is using the war as their distraction. “Worlds best practice” distraction.

    4
  18. John Brumble Avatar
    John Brumble

    My major concern with PPP is that, for a country like Germany, the corruption and graft is counted as a line item in the positives (i.e. “G”), rather than not at all or a negative.

    1
  19. Arky Avatar
    Arky

    To Sapir the service sector is today vastly overvalued in the world compared with the industrial sector and commodities.

    ..
    Where have you heard this before?
    Cough *** blowjob economy *** cough.

  20. JC Avatar
    JC

    Oh Yea. Let’s ignore valuations placed on sectors by markets around the world. Valuations in the trillions and believe the word of the Thought Leadership who has those God like qualities to assess real value.

    I mean cough cough. And the leadership is extremely humbled too.

  21. Arky Avatar
    Arky

    Hey look.
    Fucko the clown is here.

    1
  22. Arky Avatar
    Arky

    Here’s that quiz you missed last night Fucko:
    Multiple choice quiz:
    1. Income tax was first introduced in the US in:
    A. 1913.
    B. Some year I just made up.
    C. During the civil war maybe?
    D. Derrrrrrrr… I don’t need to know naffing.
    E. Smoot Hawley. The answer is always Smoot Hawley, isn’t it?

    2
  23. JC Avatar
    JC

    Leadership, stop wrecking subject specific threads with your lowrent egotistical crap.

    The argument is that Russian economy is “undervalued” in terms of PPP and more so if one takes the services sector out of the picture from the west’s ledger. PPP has relevance twice, once when you’re going up through it and then down it’s heading south.

    If you’re looking for comfort with regards to the Russian economy you won’t be getting any because there’s not much going on there in terms of manufacturing, you laughable clown. They really don’t make nafink except third rate military equipment.

    You never made the “prediction” you think you made, you buffoon.

    But, let’s go back to services. The market is wrong to be attributing such high valuations and you’re right? That’s correct, yea? LOL

    1
  24. Arky Avatar
    Arky

    Leadership, stop wrecking subject specific threads with your lowrent egotistical crap

    ..
    You NEVER comment on the threads.
    Piss off back to the open thread sewer you already wrecked for most.
    Stay off the topic threads.
    They are for adults.

    1
  25. JC Avatar
    JC

    lol, you egotistical wanker. Cough cough.

    1

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