According to Patrick’s proprietary model, Russia will have fairly modest growth over the coming decades, primarily held back by the country’s shrinking population. In fact, of all the countries analyzed with this model, Russia’s population is expected to shrink more than any other country accept Japan. Since consumer spending accounts for about half of Russia’s gross domestic product (GDP), their population situation spells trouble for economic growth. The central pillar of their economy is their energy sector, discussed in more detail below.
Russia has a serious “youth deficit” currently. The fertility rate is low. And since political volatility and social unrest are highly correlated with “youth bulges”, Russia will remain quite stable in the years ahead. Yes, there were protests after Vladimir Putin’s election in 2012, but the media gave them disproportionate coverage. Approximately 20,000 people protested in March and demonstrations of a similar size occurred over two days at the time of his inauguration in May. In a country of 141 million, those are small and Russia will have continued stability in the future.
Russia has a high median age and a low life expectancy. The high median age is driven by the youth deficit. There aren’t very many young people. Meanwhile, the low life expectancy is a function of relatively poor public health and high rates of alcoholism. The interesting thing about the graphic below is the trade surplus. Russia has a lot of oil and that will be the saving grace of their economy for the foreseeable future, so we can expect a major focus on the energy sector in Russia and international influence that is highly correlated to oil prices.
The graphic below shows the large “youth deficit” in the Russian population as of 2010. It will moderate over the next 30 years but Russia also has a lot of older retired citizens, despite low average life expectancy. Those older people will put a strain on public resources through entitlement programs but the Russian central government is well funded from the oil trade. Also, note that consumer spending accounts for just 48% of gross domestic product (GDP), something that is characteristic of export-driven economies with significant capital infrastructure.
Patrick is an award-winning author and keynote speaker who can speak about demographic trends affecting Russia at conferences and business events in Moscow, St. Petersburg or other Russian destinations.
DISCLAIMER: Projected results are NOT guaranteed. The forecasts for Russia above were calculated based on projected population data obtained from the World Bank website. The economic forecast used this demographic data along with adjusters for net exports, relative age distribution and per capita income projections. The political volatility forecast used the same demographic data along with adjusters for youth population percentage, projected economic growth and public government debt level. Please see the model methodology for more details.
Patrick Schwerdtfeger maintains a video blog entitled “Strategic Business Insights” and adds new videos on a regular basis. Some of the videos are ‘macro’ covering topics like global business trends and geopolitical dynamics. Others are ‘micro’ covering communication skills and your mental mindset. Access them here:
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