The Duran Podcast - Sanctions driving growth in Russian economy

Episode Date: February 12, 2025

Sanctions driving growth in Russian economy

All right, Alexander, let's do a video on the Russian economy. 4.1% growth. Shocked everybody, I believe. Even the Kremlin, it seems. What is behind this growth? Should the Russians be thanking the sanctions, the Collective West sanctions for all of this economic growth? I'm going to anticipate and say that that is exactly what they should thank. because what we've now had is a meeting between Putin and the Russian Prime Minister

Muschustin in which they went through all of the figures. And you're absolutely correct. They have been astonished themselves by the pace of economic expansion in Russia. Now, the growth figures for 2023 had up to now being put at 3.6% GDP growth. They've been revised upwards. So we now have a new figure for 2023 growth, which is 4.1% growth in GDP. The figure, the anticipated, the expected GDP growth number for 2024 was 3.9%. It's now been revised upwards to also 4.1% GDP growth.

But he's going to be revised again, and it almost certainly is going to be revised upwards. So we're likely to see GDP growth in Russia in 2024 at around 4.5, 4.6, 4.7 percent. Very, very rapid, not that less than China, by the way. And what was most interesting was that Muschustin went through and, discussed with Putin where the biggest growth drivers are coming from. And this is where you start to get this enormous divergence between the Western narrative and what looked like the actual Russian realities, because the Western narrative is that what is causing growth in Russia to accelerate is massive spending for the war, you know, the budget, the Russians are spending money on producing shells

and bombs and tanks and all of that kind of thing, and that is causing the economy to grow rapidly. It's military Keynesianism and all of that. If you listen and read what Mischustin is saying, it doesn't seem to be that at all. If you listen and listen to what the Russians are saying, it doesn't seem to be that at all. What it is, what seems to be driving growth is precisely the sanctions. Now, what appears to be happening in the Russian economy is this. With the sanctions, Western companies pulled out of Russia, imports into Russia, from into Russia, from the West, essentially stopped.

The Russian economy, Russian businesses, Russian industries have therefore seen gaps in the economy, which they are aggressively filling. In order to fill those gaps, they are ramping up their own production. They have engaged, therefore, in a huge investment program. And that is playing out in the way in which we see the economy. numbers, the biggest single growth driver is manufacturing, and that means across the board manufacturing. And the single biggest sector within the manufacturing complex that is growing fastest is machine

building, which accounts for about 40% of industrial growth. you see machine building expand at that rate, that tells you that Russian factories are expanding their production rates. They are retooling fast. And the reason that they are retooling is that they need to expand production in order to keep up with demand. So it is the sanctions, the fact that the sanctions have caused all of these gaps in the economy, which are leading to a process of re-industrialization, and it is that process of re-industrialization, which is triggering the high-growth numbers. Reindustrialization. Because of the sanctions, Germany is undergoing de-industrialization. Because of the sanctions,

Russia is undergoing re-industrialization. Does anyone in the collective West see this? Does anyone in Europe see this? No. No. I mean, they are living, living in the in fantasy lands. I mean, they're talking about, you know, military Keynesianism, about, you know, the Russians coercing the banking sector to keep the military industrial complex, expanding, all of that sort of thing. But that is not what the actual raw numbers are telling us. They're telling us of an economy which is looking, is filling up the gaps. is addressing its bottlenecks through a very aggressive investment program, which is leading to much higher output.

Industrial output in Russia last year increased by over 8 percent, as I said, was machine building accounting for 40 percent of that. There are particular sectors that are growing even more rapidly, passenger vehicles. over about 30% growth in production of passenger cars, for example. You see the same with, you know, computer equipment and, you know, that kind of equipment. By the way, the Russians have a very, very ambitious program to develop their chip industry, which is a big topic, which we can discuss another day. We see the same happening in aerospace.

We see lots of things like this happening. And of course, increased production for the consumer economy as well. Consumer goods being produced, often by former factories that used to be owned by Western companies. Those factories closed when the Western companies pulled out. They were bought by Russian businesses at a knock down crisis. Those factories are reopening fast. They're being retooled. And that is creating this huge surge in expansion.

There's no reason why this is going to stop, by the way. I mean, the government wants to try and slow growth in 2025, even though I should say that growth actually accelerated in December and January. We had 54, we had a PMI industry survey showing PMI industry survey showing PMI. 53 for industry and 55 for services. These are market surveys. Anything over 50 points to expansion. And this takes you very far into expansion territory. The government wants to slow this process down because they're worried that because there's all these supply bottlenecks across the system, That is pushing up inflation.

Inflation in Russia is not being caused by excessive consumer demand. It is been caused by the fact that because Western imports have been pulled out, there are supply bottlenecks. And that is causing problems in meeting demands for machine tools, equipment, and things of that kind. As that process plays out, though, inflation eventually will start to slow as the supply situation in the economy stabilizes. But as I said, what is driving things to repeat again is an investment boom, which has been caused by the sanctions. Yeah, I was going to ask you about inflation because that's what the media and cholesterol

collective West leadership always talks about when they're discussing crashing the Russian economy. They always revert back to the high inflation and the high interest rates. Yes. Can I just say something? Yeah. I think one of the great problems about understanding inflation in Russia is that within the West, we had become internalized on, in accepting what Milton Friedman said way back in the 70s. That inflation is always and invariably a monetary phenomenon. Now, when Milton Friedman said that, it was at a time when we were talking about very mature economies in the West

which were overspending. And he was absolutely right in saying what he did. But like many people who want to make a point, he overstayed it. He was being over-dogmatic about it. In Russia, inflation is not a monetary phenomenon. The budget in Russia is. under control, contrary to what people think, credit growth is also under control. Consumer credit growth is slowing largely as a result of the high interest rates and other steps that have been

taken by the central bank. Inflation in Russia is a supply issue. It's caused by the many bottlenecks that exist across the economy because imported machines. machine tools, imported equipment from the West is no longer available, and it is taking time for Russian factories to produce replacements. As those replacements are produced in ever greater quantities, and of course, as some are also imported from China and those other places, inflation will gradually abate. All right. We will end the video there. The durand.orgas.com. We are on Rumble Odyssey,

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