Putin’s economic results do not meet his global ambitions

Vladimir Putin speaks to business leaders at the 2016 St. Petersburg International Economic Forum.
Photographer: Simon Dawson / Bloomberg

Vladimir Putin's first St. Petersburg forum of his new presidential term this week is a opportunity for the Russian leader to show his geopolitical scope, with leaders from Japan and France who joined him on stage. That is a departure from past years, when many senior Western officials stayed away from the event in the midst of vertiginous tensions.

But the high-power political participation in the Kremlin's business and investor showcase contrasts with Putin's more modest economic performance. Even with the recent rebound in oil prices, the recovery is sizzling and the ruble remains weak. A bright spot is record inflation, but that has not been enough to restart the investment, paralyzed by the sanctions of the United States and the European Union, and by an unfriendly local commercial climate. Participation in the forum among the main global executives is still low.

The final result? Putin's influence in the global economy is fading, not strengthening.

The share of GDP continues to decline

Share of world GDP (purchasing power parity terms)
Source: International Monetary Fund

While Putin promised to deliver a "decisive breakthrough" in living standards In their new mandate, the forecasters see growth lagging behind the rest of the world, which means that Russia will lose ground, not gain.

GDP growth will remain slow

  • Russia
  • ■ World average

Sources: Federal Statistics Service, International Monetary Fund forecasts

Years of commitments to diversify the economy away from oil and gas have not done much, leaving Russia highly dependent on energy exports.

Rich oil

  • Ruble for dollar
  • ■ Oil price, dollars per barrel

Source: Bloomberg Data

Since the imposition of sanctions since the annexation of Crimea by Russia into Ukraine in 2014, the Kremlin has pushed to develop markets in Asia. China has been a major focus, with exports of oil and other raw materials up substantially.

Trade tilts to the east

<! –

2012-17 change in percentage points


European Union

The commercial quota fell

5.2 percentage points from 2012,

to 42%


The commercial quota increased

4 percentage points up to 15%

European Union

The commercial quota fell

5.2 pct pts from 2012,

to 42%


The commercial quota increased

4 pct pts to 15%

List Global Guest

This year Putin welcomes Shinzo Abe (Japan) and Emmanuel Macron (France) to the forum. Here are other political leaders who have received:

2012-2017 change
Source: International Monetary Fund

Trade with the honored guests at the forum, French President Emmanuel Macron and Japanese Prime Minister Shinzo Abe, They have not recovered from the fall observed as a result of the fall of 2014 in oil prices and the imposition of sanctions.

Trade U-Turn

Source: International Monetary Fund

Although Putin and Abe have met almost two dozen times in recent years, the warming in political ties has not been enough to change the fall of Commerce. The fall in oil prices reduces the value of Russia's main exports, while the fall of the ruble since 2014 has made imports of Japanese cars and machines much more expensive in Russia.

Trade Bust

Source: International Monetary Fund

Flanked by visiting leaders, Putin is likely to promote his ambitious economic goals in the forum on Friday, as he has done every year. But the audience of local business magnates, officials and some visiting executives knows that the reality of the landscape is not as optimistic as it will probably portray.


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