Struggling for the positives

Usually when an IMF mission issues a departing statement, it’s along the lines of thanking everyone for their hospitality and generally sounding positive about the scope for progress even when circumstances aren’t that great  Not so the just issued statement after the latest visit to Moscow.  It quickly gets to blunt criticism of the government for: lack of clear policy on domestic banking crisis, mismanagement of capital inflows and the exchange rate, botched fiscal stimulus, backtracking on WTO Accession, and in a nod to a favourite topic of our own Edward —

The urgency of advancing reforms is heightened by adverse demographic factors, which are leading to a contraction in the labor supply.

It’s probably hard to get the government to focus on declining labor supply as a problem when they are more focused on unemployment.  But in fact, part of the Fund’s exasperation with Russia may reflect the collateral damage the crisis is already inflicting on its CIS neighbours, which provide a critical part of the Russian labour force.  The decline in remittances to these countries is causing major problems (see pages 24-28) — in fact, the problems look much worse than the more talked about impact of the Arab Gulf slowdown on South Asia.   Overall, the tone of IMF-Russia dialogue sounds like a case of an important country that isn’t planning on needing a Fund program but the Fund views as too important to be left entirely to its own devices.

8 thoughts on “Struggling for the positives

  1. Reuters says: “The European Union’s trade commissioner ruled out on Friday finalising a strategic pact with Russia before it joins the World Trade Organisation”

    There’s a double bind here. No EU deal with Russia outside the WTO. Well, likely no accession of Russia to the WTO with Ukraine and Georgia inside WTO, either.

    This is going to be one hell of a problem. Any IMF opinions about Russian demographics or migrant remittances are just plain irrelevant in that context (Those two concerns are also obviously somewhat incongruous).

  2. And people wonder why the Russian government cares less and less what The West thinks of them. This sort of “catch-22” has been fundamental to Western dealings with Russia for several decades, and Russian patience with these games is gone.

    And as far as future labor supply goes, Russia has the second highest birth rate of any major European country, exceeded only by France.

  3. “Russia has the second highest birth rate of any major European country, exceeded only by France.”

    Interesting. Cite for this?

    Doug M.

  4. Ah, I see. You’re talking gross birth rate — not TFR — and using the CIA figures instead of the more reliable UN ones — and handwaving away various medium-sized countries (Norway) as not being “major”:

    http://en.wikipedia.org/wiki/List_of_countries_by_birth_rate

    So Russia is in good shape demographically… oh, wait. Let’s check out the death rate.

    http://en.wikipedia.org/wiki/List_of_countries_by_death_rate

    Hmm. Just ahead of Chad and Mali, but well behind Somalia, Burkina Faso, and the Republic of the Congo.

    Comparing TFRs and growth rates… eh, left as an exercise for the student.

    Doug M.

  5. “The death rate is easier to fix than the birth rate.”

    Yes, all you have to do is to get Russian men to drink less alcohol. Easy job.

  6. Well, historically speaking, Oliver is right — many countries, in many different situations, have been able to sharply lower their death rates. Very few have been able to raise their birth rates at will, and then not by much.

    That said, Russia has bucked the trend: in the last few years, their birth rate has gone up a bit, while their death rate has hardly budged.

    Doug M.

  7. It’s been a few years since I looked at the demographics in any detail, but Russia was about the only medium-income European country in which accidents were one of the top-five causes of death for adult males. Murder and suicide rates for men were also higher than comparable countries, iirc. All three are pretty directly attributable to alcohol. And that’s before you get into alcohol-related diseases.

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