Nikolai Kulbaka on how Russia’s budget deficit is planned to be addressed, whether to trust Russian official statistics and why nominal GDP growth does not mean a healthy national economy.

Summary:

• The Russian government will further cut spending on health care, education and culture.

• More efficient private investment is being replaced by inefficient public spending while consumer spending is falling.

• The opaqueness of Russian statistics is already hurting government policymaking. It is practically impossible for financial sector officials to make the right decisions without good statistics.

• Instead of investing in new, efficient production facilities, the military-industrial complex is spending most of its money on duplicating and repairing long-obsolete defense products. New designs have been shelved. As have long-term infrastructure projects. So, the biggest losses for Russia are still ahead.