The Ministry of Economic Development forecasts that over the next 20 years Russia will still fail to overcome stagnation.
The Ministry of Economic Development diplomatically avoided stating that the cause of the coming 20-year stagnation is the country’s political leadership and its decisions, but that is clear enough from the context: the rest of the world is growing faster than Russia.
Assuming “regime stability,” the forecast is quite realistic, and this sort of thing has happened more than once. One can look at the famous chart comparing the economic growth of Sweden and Argentina:
For almost the entire first half of the 20th century, Argentina was a prosperous, wealthy country. No worse off than any European one. The future looked bright. But in the 1950s, it became obsessed with “geopolitics,” much like Russia is now.
Economist Konstantin Sonin explains this in detail here.
They lost that 1% of annual GDP growth (and according to the ministry’s forecast, we will lose even more) and entered exactly this kind of period of stagnation.
You can see the result on the chart: falling behind led to falling even further behind, and poverty bred even more poverty. Today, comparing the economies of Argentina and Sweden is almost laughable. And, most interestingly, the phrase “Argentina’s geopolitical ambitions” now provokes only a smirk. In other words, in chasing a major role in international power politics, they permanently deprived themselves of any real chance at it. Well, perhaps not permanently—maybe they will recover in another 80 years.
And this is the most important thing the Ministry of Economic Development does not mention: twenty years of falling behind will most likely entrench a political tradition that will only reinforce that backwardness.
So if, after reading the headline in Vedomosti (a Russian business newspaper), you thought: 20 years? That’s a long time, of course, but I’ll only be 45 then (I’ll be 61), I can wait — then you are being too optimistic. In 20 years, things will be even worse.