In 2016, singer Robbie Williams shot a video to his song, “Party like a Russian,” in which he pokes fun at the extravagant lifestyle of wealthy Russians. Meanwhile, as The Guardian wrote the same year, the number of Russians living below the poverty level has increased since 2014. So, just how rich and poor is Russia?
A resource superpower
Natural resources are the first thing that comes to mind when one thinks of Russia’s wealth. Indeed, the country has the world’s largest known reserves of natural gas – almost a fourth of the total, according to OPEC; and in 2016 it was number one in the world in oil production, according to the U.S. Energy Information Administration.
Also, no country in the world has more forests than Russia, and its fresh water supplies are second only to that of Brazil.
Economists say the abundance of oil and gas is in some ways a curse, making Russia’s economy dependent on the vagaries of global commodity prices. Therefore, the government should do everything possible to reduce the economy’s dependence on fluctuating global demand for natural resources.
Ending the recession
The dramatic fall in oil prices between 2014 and 2016 (from $111 to $32 per barrel), together with the introduction of the West’s economic sanctions, was a major blow to the Russian economy. In 2015, Russia’s GDP fell by 2.8 percent, but in 2016 oil prices stabilized and the decline slowed, resulting only in a 0.6 percent fall, according to the Russian Statistics Agency.
Still, in 2016, Russia’s GDP purchasing power parity was $3.75 trillion, which is sixth in the world, and Russia will remain in this place for the next 33 years, until 2050, according to research by Pricewaterhouse Coopers. As far as Russia’s per capita GDP, in 2015 the figure was $9,054, which is 66th in the world, according to the World Bank.
Expert economists surveyed by Interfax news agency believe Russia is gradually emerging from the recession, but the country is moving toward a prolonged period of stagnation. Still, the data shows that Russians are becoming poorer, and in 2016 their real income fell by 5.9 percent compared to the previous year.
In 2016, the average salary in Russia was roughly 36,000 rubles, ($603 according to the November 2017 exchange rate). Comparing the average salary in Russia to that of other countries, Delovaya Zhizn newspaper wrote that Russians earn less than in Western Europe, but still more than the citizens of other countries in the former Soviet Union.
A country of inequality
The data for average salary, however, can give a skewed picture of the national average because most of the wealth is concentrated in the hands of a very small segment of the population. According to the Credit Suisse Global Wealth Report 2016, 74.5 percent of the national wealth is concentrated in the hands of one percent of the population.
The Forbes 2016 list says that there are 77 U.S. dollar billionaires in Russia. Their number, however, is decreasing – in 2015 there were 88.
“According to the Russian Statistics Agency, in recent years inequality has been declining but remains rather high in relation to other countries,” Elena Grishina, director of research of pension systems and forecasting of the social sphere at the RANEPA Institute of Social Analysis and Forecasting, told Russia Beyond.
Wealth and poverty are relative
According to the government statistics, in summer 2017 22 million Russians were classified as poor (15% of the population). Their monthly income is less than the subsistence level, which is currently 10,328 rubles ($173). Nevertheless, despite the persistent recession and the high degree of inequality, Russia’s poverty level should not be exaggerated, said Tim Worstall, economist and observer at Forbes.
Analyzing an article published by the International Business Times, which mistakenly says that Russians spend half of their monthly income on food (actually, this figure is about 11-12 percent), Worstall wrote: “If Russians were spending 50 percent of their total incomes on food then we'd be expecting the place to be as poor as Bangladesh and the like: and that simply is not true nor anywhere near it.”
This article is part of the "Why Russia…?" series in which RBTH answers popular questions about Russia.