This was reported by Reuters a few days ago. I think it’s important to (1) remember what the forecasters say, and (2) what gross domestic product (GDP) looks like excluding military spending.
The blue line (pink line) in Figure 1 below shows the IMF July (OECD June) GDP forecast.
figure 1: Real GDP growth for Russia comes from IMF July World Economic Outlook (blue), OECD Economic Outlook (pink) and Russian Finance Minister August 2023 (red asterisk). Source: GDP from IMF World Economic Outlook (April, July), OECD, Reuters.
The Treasury estimate is at the upper end of the range given by the Bank of Russia (1.5-2.5%).
Recall that this is overall GDP growth, part of which is to avoid more negative growth by: increased defense spending. The brown line shows the growth rate of ex-military spending (estimated by SIPRI), based on projections from the IMF’s World Economic Outlook. Equivalent to a downward shift if the OECD forecast is used.
figure 2: Russian real GDP growth from IMF July WEO (blue), ex-military spending from SIPRI (tan), using H1 2023 spending rates (tan squares), using Reuters coverage Budget 2023 (light green triangle). All calculations are based on IMF World Economic Outlook GDP. Source: GDP from IMF World Economic Outlook (April, July), Reuters.
See how I calculate GDP Ex-Military Spending Notes postal. I thought SIPRI covered all defense/security related spending, but it doesn’t (one estimate is only 3/4). The other is that I assume the deflator for defense spending is the same as the deflator for non-defense GDP. Finally, as far as the depreciation of defense capital is concerned, it is “gross domestic product”, not “net”. tanks, helicopters, self-propelled artilleryammunition consumed) are not included.
If the estimated level of defense spending is held constant, GDP growth excluding military spending could be negative even though the Treasury’s GDP growth forecast is higher.
