The Duran Podcast - Russian economy investment boom, industrial surge

Episode Date: November 22, 2023

Russian economy investment boom, industrial surge

All right, Alexander, let's revisit the Russian economy because the Russian economy is booming, I guess you could say. The European Union, they ran their forecasts, and they say the Russian economy will grow at around 2.5%, I think they said. We've heard over 3% from, I think mostly from Russian sources. And Putin was speaking the other day at a cultural event in St. Petersburg. And he said for November, Russia's looking at 5.5% growth. And I have to say, Putin was very confident, very relaxed, very confident about the Russian economy. So, you know, you've been following the Russian economy very closely. we've been talking about the Russian economy, it seems, for years. And I just want to, I just want to

quickly say that when all of this started, the conflict, the SMO, all the analysts were saying that the Russian economy will collapse. And that was the aim. And you were saying, and we were saying, and people can go back and see those shows from January, February, March, that, no, the Russian economy is not going to collapse. It's much stronger than people realize. But I think even we're surprised at how resilient the economy, the Russian economy has been. Yes, I think people. Maybe even Putin's surprise. Maybe even Putin surprised. Sorry. Well, he has acknowledged as much. But, you know, talking about pessimistic forecasts, I mean, at the start of this year, the European Union, the European Commission was predicting a 1% contraction in the economy, the Russian economy this year.

It now definitely looks as if we're going to get a 3% expansion. And as you absolutely rightly say, this is in fact not reflective of the most recent data. The last couple of months, it's been running. The Russian economy has been running with a growth rate of over 5%. percent, over 5%. So, and what is very interesting is that it is doing that despite the central bank having raised interest rates, I mean interest rates in Russia have doubled. But despite that, the economy still appears to have an enormous amount of forward momentum. Apparently, consumer spending has increased, demand has increased. But the big story, the underlying

reason why there is this huge increase in growth is of an investment boom. There's an enormous surge in investment as Russian industry moves rapidly to fill the gaps left by the Western powers when they pull their businesses out and when they started to impose sanctions. And you're seeing this in sector after sector, perhaps the single most impressive, and the most interesting is machine building, where we're now looking at double-digit growth rates in some particular sectors of the machine building,

machine tool complex. I mean, production increase of around 50% apparently this year. So, I mean, you know, it is a huge industrial manufacturing surge and probably things will slow as the effect of the interest rates starts to, you know, put the brake on. And that is what the Russian government and the central bank want, because this investment surge is leading to signs of overheating. The shortages of workers, we've talked about this, that's pushed up wages. The wages have in turn increased demand. The demand is spurring further investment and further

output increases. It also means that this year, real living standards in Russia have grown, but it's also translating into higher prices for goods, because at the end of the day, goods, you can only produce them after a certain time lag, even if you do invest more, and the demand for them is greater. And inflation may not be a problem for those who are in employment in the economy, given the fact that real wages are rising. But it is a problem for those who are on fixed incomes, people like pensioners, for example. So, you know, the government is concerned about that, and it wants things to slow down and rebalance. But nobody doubts that that is going to happen.

No one doubts also that we're going to see sustained growth beyond this process. nobody is under any beliefs that industrial growth is going to fall off or reverse. And this is becoming the consensus. And it's also becoming the consensus now amongst Western commentators. We've had a piece on Bloomberg about this, which has been, you know, describing the realities of this Russian economic boom. And it is the diametric opposite, as you correctly say, what Western economists and analysts, governments were predicting. Last year, when the sanctions were imposed, they were anticipating a 20% contraction.

Today, the Russian economy is bigger, probably by a significant margin bigger, by the way, despite Bloomberg trying to argue the contrary. But today, the Russian economy is probably big. than it was before the sanctions were imposed. And that's probably set to continue and to accelerate even further. And they've also had a good harvest. Grain production has been slightly down on last year because weather conditions have been less than optimal for grain production, but in every other food sector, food production continues to grow as well. So agriculture is doing well. Industry is doing well.

very well. Wage earners are seeing their living standards improve. Young families, people with children, they're seeing their conditions of life improve. I wouldn't be surprised if before long, we start to see an increase in the birth rate on the back of this. And on top of all of that, if you remember, at the start of last year,

we had to do a whole series of programs about it, flesh-creeping stories about the budget, going into massive deficit. you know and you know we Russia running out of money and all of that well all that's evaporated away the budget well there's this

it probably will run a small deficit this year but it could even be a surplus there are eight things ago I've read a surplus yeah I've read some battles who says surplus currently it is running a surplus so I mean all of that all of I mean we we poured cold water over all of that

We poured cold water over all the stories about the rubble collapsing and all of that as well. And we could see that, you know, our assessments have proved to be more accurate than I think everybody else is. I mean, I remember there was a professor at Yale, for example, last year who was saying it was all smoking mirrors. The Russian economy was hollowed out. And the statistics were all fake. I don't think anybody says that anymore. So how would you put this into context? given this, Lavrov has called it a hybrid war against Russia. That's Lavrov's words.

How would you put the economic, let's just call it the economic war that has been waged towards Russia into context of this hybrid war? Is it not probably the most important part of the collective West's attack towards Russia, sinking the economy, getting people out on the streets and removing Putin? I mean, I would say that, you know, we put a lot of emphasis on the actual war, the conflict in Ukraine on the front lines. And we talk about that a lot. But I think the central pillar of the West's strategy towards Russia over the past couple of years has been to get this regime change.

And the most important part of that strategy was getting the sanctions and trying to sink the Russian economy. I mean, this is the, the major defeat in this hybrid war for the collective West. Absolutely. Can I just say that is absolutely the case. And if you look at all those articles that we were talking about, the magical thinking article in the Wall Street Journal, the one that Richard Haas has just written in foreign affairs, an article that appeared yesterday in the London Times by Mark Galiati. The thing that they're all talking about is that Putin remains in control. His position is stronger than ever. And so when they talk like that, they're giving it away because they're basically admitting, they're acknowledging that the entire objective, the whole expectation

was that the sanctions on the war and all that, all that would trigger protests and crisis, political, internal crisis in Russia, and that would lead to a regime change. I mean, you can see it now, even in these articles that are now acknowledging that that won't happen. Why do they have to acknowledge that it won't happen unless it was what people were expecting and intending should happen? So they're essentially admitting that the key thing that they try to do has not happened and that it has failed. And as for the search, the way in which the Russian economy has responded to this crisis,

may be under no doubt about it, it is the single biggest geopolitical fact of the last two years. I mean, the West has thrown every single sanctions to it has at Russia. I mean, it's now sanctioning everything that they can sanction where Russia is concerned. They're now trying to go after people who operate the shadow fleet. You remember all that? We had articles now, the Financial Times, furiously saying the oil, no Russian oil, practically no Russian oil cells below the price gap. You said the price gap would fail.

It has surprise, surprise. It has completely failed. And they're now angry about that. They're angry about all of these things. But that is the single biggest geopolitical, geopolitical, fact of the last two years that Russia has not only withstood the sanctions storm, but is thriving, thriving, not in spite of it, but because of it,

it's actually the sanctions, I mean, Michael Hudson, actually, we did a program, Glenn Dyson and I on the Duran, which he was talking about this. He said, there's the best thing they could have done to the Russians. He posed this, you know, this system, which is a kind of protectionist system on the Russian economy, which is exactly what it needed. We have the stimulus that war spending, which people, the scale of that people are exaggerating, by the way, but the stimulus that the war spending has provided is causing the entire economy to surge just as happened with the United States during the Second World War, just as happened perhaps

more, a better analogy still, might be with Japan in the 1950s during the Korean War, when again, the Japanese economy went on a massive, you know, suddenly cranked up a huge gear because the Korean War triggered extra spending in Japan. And because at that time, because of high inflation and all kinds of things like that in Japan, effectively the economy was in effect protected from outside competition. So we see all of this now starting to play out in Russia. And countries around the world are noticing. And then Russian prestige as a result is increasing.

It's why countries in Africa and Latin America and all these sorts of places in the global south, the ASEAN states, they all want to, the Arab states, they all want to have dealings with the Russians because they can see that the Russians are not only a success, but a great success, who have withstood successfully the pressure of the West. Sanctions, it turns out,

aren't quite the killer thing that everybody thought they would be. That's huge. And that's huge. That's a huge statement because the sanctions weapon was the go-to weapon for for the United States. And the EU. The EU is starting to use sanctions or was starting to use sanctions more frequently. You mean, sanctions was their go-to weapon.

And now that weapon has been proven to be ineffective, at least to an economy like Russia. And so, yeah, they've also destroyed their own economies. They've destroyed the monopoly of Swift. of so many Western businesses that were in Russia that built the market over many, many decades left the market and they left a huge opening for competition. The collective West's financial reputation has been destroyed. I mean, you know, I joke around. I joke around sometimes and I say that Russia, the Russians are going to build statues

in Moscow for Ursula and for Joseph Borell. I mean, because of the gift that they've given Russia. with their 12, 13, 14 sanctions packages. Absolutely correct. That is exactly what's going to happen. I mean, bear in my own. Well, I mean, it's a joke. But I mean, it's a joke.

It's a joke. It's a joke. It's a joke. But economists are saying this. I mean, you know, I go back to Michael Hudson. He said this is the best thing that they could have done to them. He's not alone in this. I mean, Joseph Galbraith recently said something similar. And others are increasingly coming around to that.

right. I mean, Hudson and Galbraith are perhaps on the sort of left wing side of economics. But Bloomberg is, and, you know, they're absolutely, you know, mainstream. And we can see that even their acknowledging that things have turned out otherwise from what people thought. And when you actually scramble and look at the explanations, it's not difficult to see why. All right. We will end it there. durad.locals.com. We are on Rumble Odyssey, but shoot Rockfin Telegram and Twitter X and go to the Duran shop, 20% off. Use the code the Duran 20. Take care.