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31 Aug, 2020 18:30

Russia on course to replace Germany as Europe's leading economy & enter global top five this year – Putin's economic advisor

Russia on course to replace Germany as Europe's leading economy & enter global top five this year – Putin's economic advisor

For a long time now, officials in Moscow have spoken of a desire to see Russia become the world's fifth largest economy, measured by purchasing power parity. The Kremlin believes 2020 will be the year it finally happens.

Putin's chief economic advisor Maxim Oreshkin said on Monday that estimates from the International Monetary Fund (IMF) and post-pandemic GDP projections suggest Russia is poised to meet the target. His comments came as the Ministry of Economic Development revised its estimate of the decline in Russia's economy in 2020 from 5% to 3.9%.

While that's a significant fall, it's not as drastic as what most Western countries are facing. Germany itself may see a GDP plunge of around 6.5%, according to state-broadcaster Deutsche Welle, with Britain and the US looking at even steeper falls. The Ministry also reckons that Russia will rebound quickly next year, with economic strength back to pre-coronavirus levels by next summer.

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"Russia has not dropped the goal of joining the top five [global] economies. If you open the latest outlook of the International Monetary Fund for this year, you will see Russia will be the fifth economy of the world, will achieve this level. It can be said it [the goal] is delivered this year," Oreshkin said.

It will be necessary to consolidate the position among the top five most developed world’s economies, he added: "Further on, performance and delivery of the goal on sustainable economic development above the world’s average indicators will make it possible to remain in this group."

The IMF's projections place Russia's GDP by year end at $4,176 billion with Germany just behind on $4,160 billion and Japan sitting in fourth ($5,451 billion). However, when measured by nominal dollars, at current exchange rates, Russia is only 11th ($1,637 billion) and Germany sits in fifth ($3,863 billion). The disparity is explained by the massive devaluation of the ruble since 2013. The IMF believes that the Russian currency is undervalued by a factor of around 2.7 times, against the dollar.

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