Issue 6, November 2008
|The Putin Years - Recovery and Resurgence|
The Russian economic turnaround under Putin’s leadership has been spectacular. Russia’s GDP has grown to over six times its 1999 level; average wages have increased almost tenfold. The percentage of people living below the poverty line has halved. Once totaling 150% of GDP, nearly all foreign debt has been paid off. Russia has become the 12th largest economy in the world, holding significant foreign currency reserves as well as funding a giant stabilization (or rainy day) fund. Moscow became home to the most billionaires in the world, and the fastest growing group of millionaires.
This impressive growth was accomplished because Putin was able to take advantage of the exploding demand for energy and a dramatic rise in the price of oil and gas over the past ten years. Russia has become the world’s largest exporter of oil and natural gas at a time of historic highs in global prices.
The windfall in energy profits may have been serendipitous, but Putin’s consolidation of these resulting gains has been deliberate. Even before energy revenues flooded the Russian economy, Putin carefully managed the extension of government control over critical economic assets. A distinctly Russian economic system was born – not socialism, but not capitalism either.