According to PROSPECTS 2011: Global economy by Oxford Analytica Daily Brief Service. Nov 01, 2010. pg. 1…A moderation in growth is on the cards, but emerging markets will continue to fuel international expansion...[..] The acronym BRIC which was coined by Goldman Sachs about 6 years ago, stands for Brazil, Russia, India and China. Many people have taken this term for granted, assuming that these four potentially prosperous "developing" nations will equally contribute to and drive economic global growth in the next decade.
Unfortunately, some of the assumptions that we took for granted about Russia prior to 2008. no longer hold true.
Part 1 Russia is shrinking not growing say demographers.
"Russia is another emerging-market country widely regarded as holding immense economic promise, not least by the leaders in the Kremlin. Despite the current economic downturn, official Russian plans envision economic growth of six percent a year through 2020 and continuing rapid growth thereafter. But these ambitious visions seem to ignore the fact that the country has been in the grip of a protracted demographic crisis since the end of communist rule. Since 1992, Russia's deaths have outnumbered births by roughly 50 percent, or about 13 million, and official figures suggest that the country's population has shrunk by about five percent--nearly seven million people--from 148.6 million in 1993 to 141.9 million today.
Immigration has helped slow the country's population decline but has not been able to prevent it.
The outlook is for further depopulation: medium variant projections by the Kremlin's official statistical service envision ten million more deaths than births over the next two decades.
Even more troubling for Russia is the country's disastrous public health situation. In 2009, as hard as it may be to believe, Russia's overall life expectancy was a bit lower than it had been in 1961, almost half a century earlier. To make matters worse, at least from an economic standpoint, Russia's health crisis is concentrated in its working-age population. Over the 40 years between 1965 and 2005, for example, the death rates for men between their late 20s and their mid-50s virtually doubled. Death rates for women in that same age group generally rose by about 50 percent. Public health experts do not entirely understand the reasons for this death spiral--although poor diet, smoking, sedentary lifestyles, and, above all, Russia's deadly romance with vodka can explain much of the deterioration, the actual decline is worse than what these risk factors alone would suggest. In some respects, contemporary health levels for Russian adults are akin to those for adults in the world's most impoverished states. According to estimates by the World Health Organization, life expectancy for a 15-year-old man in 2008 would have been lower in Russia than in Cambodia, Eritrea, or Haiti. Between now and 2030, the U.S. Census Bureau projects that Russia's working-age population will fall by nearly 20 percent, and Russia's work force will almost surely suffer more ill health than its counterparts in the OECD and than the work forces of the other BRIC countries (Brazil, India, and China). In 2008, according to World Health Organization estimates, mortality levels for Russia's working-age population were 25 percent higher than those for India's.
Urban centers are typically the hubs of economic growth, but Russia's urban population is smaller today than it was at the end of the communist era, and the UN projects that there will be even fewer inhabitants in Russia's cities 20 years from now. In addition, Russia's old-age burden will be steadily increasing--whereas 13 percent of the Russian population today is 65 or older, the projected proportion for 2030 is 21 percent.
Taking all the above into account, it is difficult to see how Russia can hope to generate sustained and rapid economic growth on the basis of its human resources. Natural resources may offer the country economic opportunities in the years ahead, but these opportunities should not be exaggerated.
(Russia has increased its GDP forecasts for 2011-2020 to +6% per annum, while the IMF and OECD conversely has lowered GDP forecasts for Russia)
Despite all of Russia's energy and mineral wealth, its annual export earnings have never exceeded those of Belgium, not even at the height of the pre-crisis oil boom."
Source: The Demographic Future. By: Eberstadt, Nicholas, Foreign Affairs, 00157120, Nov/Dec2010, Vol. 89, Issue 6.
Part 2 .....Could Russia default again or GAZPROM go bankrupt in 2011 or 2012? (next time)
Walter Derzko
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