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Consolidating services

Summary: Russia faces bleak economic prospects for the next few years.It may be a case of managed decline in which the government appeases social and political demands by tapping the big reserves it accumulated during the boom years with oil and gas exports.

An additional analytical complication is the issue of how much Russia’s large shadow economy contributes to its gross domestic product (GDP).

(For example, there was a gap of million, or 0.5 percent of GDP, between Russia’s calculations of imports from China and China’s calculation of the scale of its exports to Russia.) In the same fashion, businessmen declare lower prices for services so as to reduce the amount of value-added tax (VAT) they pay, and prices for export goods are artificially reduced so as to declare lower revenues and avoid paying income taxes.

Shadow business comprised 10 percent of the Russian economy in 2013–2014—a significant drop from the 1990s, when, according to some estimates, unofficial businesses actually outnumbered officially registered ones.

Pre-1991 economic indicators are hardly any use as statistical methods employed in that era were completely different from modern ones.

They measured an artificially valued currency and operated within a price-controlled economy.


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