Dr. Alexey Vedev explained whether GDP always shows economic growth and why Rosstat has sharply improved its estimates for 2022

Dr. Vedev, Head of the Financial Studies Department at the Gaidar Institute, explained to RBC, what the improvement of Rosstat's GDP estimates for 2022 mean and why this indicator does not fully reflect the real state of the economy.

According to the Rosstat's reassessment of Russian GDP development calculations for 2022, the recession indicator was changed from 2.1% to 1.2%. Alexey Vedev admitted that such an improvement in the indicator is unexpected, although the revaluation trend has already been observed for a long time.

The experts’ estimates by both Russian and international organizations on the decline in the economy in the previous year were much more pessimistic even than the Rosstat preliminary estimate, Alexey Vedev reminded. “Such a significant revision of the value taking into account certain growth in the base (clarification of 0.3 p.p. of growth in 2021) cannot but cause surprise,” he emphasized.

Rosstat data shows that growth of output in agriculture (crop production, animal husbandry) for 2022 was revised from 8.3 to 9.4%, in manufacturing of finished metal products, i.e. from 6 to 13.3%, computers and electronic products from 2 to 10,5%, land and pipeline transport from 0.3 to 1.2%, professional, scientific and technical activities from -5.1 to +1.1%, activities of travel agencies from 4.3 to 9.1%.

Dr. Vedev believes that explanation of the GDP adjustment due to the indicators in transportation or tourism looks controversial. “The decline in international transportation, in transmission through pipelines was quite noticeable. Growth in tourism is also very doubtful, as main tourist destinations have become inaccessible due to restrictions in flights or increased cost of tours and transportation”, he explained.

Alexey Vedev focused on the fact that the Rosstat updated data do not indicate increased optimism in the economy, they only confirm early experts’ forecasts.

“It is hardly possible to consider any change in estimation of potential growth rates of the Russian economy”, Dr. Vedev expressed skepticism. If we consider GDP for 2022 and preliminary GDP estimates for 2023, you can see that the economy grew by 2.3% in those two years. “This fully corresponds to our estimates of the economy’s potential growth rate of about 1.2% per year», the expert believes.

Business surveys of industrial enterprises conducted by the Gaidar Institute also indicated that the output plans in 2023 showed growth after the shock of 2022 and even symbolically surpassed the optimism of 2021. The balance of the estimates of inventories of finished products grew in 2023 to zero after local minimum of 2021, which evidenced -9 p.p.