Examining the effects of potential shocks on the Russian economy

Abstract

Applying the most recent international input-output tables, we examine potential short-term effects of various demand shocks on the Russian economy. Our analysis suggests that a reduction of 1 % in Chinese final demand results in a 0.1 % decline in Russian GDP. Similarly, a 10 % contraction in Russian oil production causes a GDP decline of 1.6 %, while a contraction in oil refining activity leads to a GDP drop of 0.8 %. We also illustrate that Russia could achieve higher growth by real-locating public spending to non-military purposes, but maintaining military capability is a political priority for Russia’s regime.