Russia Economy Thread
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As the name suggested Russia expo at Dubai food Show is widely participated.
Russia India trade reached $65b in 2023.
Putin gave Aurus automobile as Gift to North Korean leader. and if it is a Presidential version it will be several million dollar and upto 7 tons heavy.
The South Korea desire to return to Russian market and this used Japanese direct import RHD vehicle still continue. The indirect import is separate. I think there is some force that is pushing Russia to have trade relation improved with SKorea and Japan.
Russia India trade reached $65b in 2023.
Putin gave Aurus automobile as Gift to North Korean leader. and if it is a Presidential version it will be several million dollar and upto 7 tons heavy.
The South Korea desire to return to Russian market and this used Japanese direct import RHD vehicle still continue. The indirect import is separate. I think there is some force that is pushing Russia to have trade relation improved with SKorea and Japan.
I strongly disagree.
Regardless, the next logical steps in my opinion, is further mobilization and possibly using Belarus to stage an attack against Ukraine's core. The more United States enables a total war scenario for Ukraine, the more likely that Russia will start treating this conflict as a total war conflict. The goals will shift slowly from reaching a "political understanding", to regime change, to actual destruction of Ukraine's former government (I.E. constitution, established institutions, to possibly changing the capital, etc).
But at no point do I believe that Russia will resort to nuclear weapons.
If you follow Stanimir Dobrev, his arguments rely primarily on the limit of human capital in Russia. Indeed, Russia does have near full-employment.
However, IMO, him and other pundits severely underestimate the effect of investment on productivity. As Russia has run out of easy, cheap labor. They will instead resort to increasing capitalization (new equipment, new training, new partnerships) to increase output. Which will obviously make Russia stronger in the long-term.
IMO, one should be looking at WW2's effect on United States. In which case, history tells us that Russia is in much bigger danger of recession when the war is over, rather than during the war. in fact, it may hit an inflationary spiral if the conflict were to end. Men with money to spend and an economy that was optimized to produce tanks rather than tractors, means a shortage in goods which leads to a rise in prices of those goods.
That is where China comes in! Russia dont need to worry about post mobilization economy. This is not USSR anymore. China is the biggest source of civilian industry. Russia will have access to that unlike USSR.
For large country like Russia, trouble is always about inefficiency of using it tools available than having more access to tools. When the war starts, the crony and the competent are quickly sorted out, because the competent produce results under harsh conditions, the crony fail catastrophically. This allows the system to sort out the good components and bad, then repair itself.
It is the same reason the moment Chinese semiconductor is under sanction, it only grew. Because when the entire nation is razor focused, the crony has nowhere to hide. This same harshness cannot be produced in peaceful times, because people will overthrow which ever leader apply it. When an external force apply the harsh condition, the internal political barrier conviniently disappears.
In conclusion, while the war does hurt some of Russias trade potential, these potential are not the bottlenecks. Russia does not lack potential. Rather, it lacks the means to make good use of what it already have, that is the true bottleneck. War and sanction conveniently solved the bigger problem of Russia at minor cost of potential. The result is a net benefit to Russia. In fact, Russia is not even fully economically mobilized yet. It would be prudent to make it last longer until Russia get its systems together. No rush to deliver the fatal blow to Ukraine from Belarus.
There is some caveats against the limit in human labour, I don’t remember numbers but there are partial time jobs that could be increased to full time and so on.
But yes, due to shortages of labour there is big investment in things like robotisation. You see this iconic robots delivering food in Moscow, the investmen of Kamaz in autonomous trucks due to lack of drivers and so on.
Also there is something people forget. This war is existencial for Russia, and at the same time its infrastructure is not being destroyed.
Existencial wars (opposite to adventurous wars) have historically have a positive effect in societies.
The state need to invest money heavily in developing the society, money flow to the low classes that support the war efforts, oligarch are tightly controlled because the state cannot allow a parasitic rentier class and many inefficiencies are eliminated.
Many social and industrial development has been promoted by countries fighting wars consider existencial.
The dark side is if your infrastructure is destroyed, but that is not the case for Russia.
Everything you see in Russia right now matches this pattern.
There is big pressure in companies to produce more, this means firing incompetent people.
There is big flow of money from the state to the military but also to the civilian industries.
The military know no excuses. If the military industry needs a CNC machine, it has to be provided. Money is allocated to companies that created it. But this companies also can serve later civilian sector.
Even if you buy a Chinese one is an investment than in normal times you don’t do, and most military industries in Russia also have civilian branches.
Also Russian government is investing more in infrastructure than in years
And they are nationalising lot of oligarch things in this time, specially of oligarch that spoke against the war and so on.
This will also benefit them long run.
And I indeed think that for Russia is more convenient to maintain this war during minimum 5 years to delay as much as possible the “coming back to normal”.
As much time you give to Russian companies to adapt more powerful they become.
In the aeronautic industry for example. This year Russia plans to create 4 MC21. Probably next year they will double it. And so on.
If was finish this year some liberal idiot in Aeroflot will come and say,oh let’s better buy airbus.
If war finished in 5 years when Russia is producing already 20/40 MC21 and Aeroflot already have 100 of them is more difficult that airbus regain market.
About the inflation when the war will finish. I don’t think they will have such high inflation. They will have to invest lot of money in rebuilding Donbass and so on.
and that money should have a big return of investment
I think Russia has a very good future ahead indeed, although for that they should get rid of the last westernised liberal idiots in their elite. Their central bank does really weird stuff. This nabiulina seems such a complete westernised moron that k don’t understand what she is doing there keeping rates at 16% while she allow oligarch to flow their money out of Russia during every year of the war
Also when you work and you know that your work benefit your country you are highly motivated and your life has sense.
When you are a Russian or Chinese guy working in strategic industries you know that your work directly help your people, society and country and that is a powerful motivator.
For example I used to work in military European sector, but I am totally against NATO. I was highly unmotivated for the work since it was contra to my beliefs.
Now that I work in civilian stuff I am much more productive. I only can imagine how much productive you are when the stakes are to defend your country
I notice as a whole people in western nation lack purpose. Not only does it lead to being unproductive, it also lead to dangerous pursuits to find this purpose. In extreme cases, some people sign up for war despite having access to better careers.
Should this problem the be solved, the nation stand to benefit immensely. To some extent, the war helped Russia in this regard. People have purpose again not found since fall of USSR.
When Western companies left the Russian market they left a huge vacuum. Russia isn't a centralized economy anymore. And there is a lot of private capital. A lot of people took advantage of this to replace the Western companies which left. And what consumer goods Russia cannot produce itself, it is importing from China.
Russia has long had an issue with lack of labor force. In Soviet times there was a state policy of full employment. You can still somewhat see the effects of it today. Companies often hire workers they don't exactly need at present just to have enough people around in case they need to increase production. This is perceived by Western observers as inefficient. But when something like this major crisis happens then they can more easily ramp up production than a lean company could.
I also expect Russia eventually to start hiring more foreign workers for their economy. They have a huge trade surplus with India. And the Indians don't produce enough goods. But they sure have a lot of people. So Russia could start importing Indian labor like Middle Eastern countries do.
Russia has long had an issue with lack of labor force. In Soviet times there was a state policy of full employment. You can still somewhat see the effects of it today. Companies often hire workers they don't exactly need at present just to have enough people around in case they need to increase production. This is perceived by Western observers as inefficient. But when something like this major crisis happens then they can more easily ramp up production than a lean company could.
I also expect Russia eventually to start hiring more foreign workers for their economy. They have a huge trade surplus with India. And the Indians don't produce enough goods. But they sure have a lot of people. So Russia could start importing Indian labor like Middle Eastern countries do.
There is a need for used cars and parts because there are already thousands Japanese and Korean cars and unfortunately relatively few people can afford a change to a new car even a cheap Chinese or domestic
Except of the dead or disabled soldiers. Both sides.
And of course the reality that a colossal effort is being made in terms of productivity just to be destroyed in the battelfield. Both human and material "capital"
Historically Russia would import labour from FSU states like Kazakhstan where the Russian language is common.
I expect that to happen again once the economy improves