Russian Federation

GDP (US$) : 2.097 trillion [9th]

Population : 143 million [9th]

Source : Official State Committee of Statistics of Russia

INFLATION, GDP & UNEMPLOYMENT

GMBA-EN-BF-2014 – GROUP C ECONOMIC ENVIRONMENT AND COUNTRY ANALYSIS

0%

2%

4%

6%

8%

10%

12%

14%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Unemployment Inflation

PHILLIPS CURVE

A Historical Inverse Relationship Between Rates Of Unemployment And Corresponding Rates Of Inflation That Result In An Economy. Is it working in Russia ?

• 2004-2005 => No negative relationship between unemployment and inflation. Philips Curve is not working in this years. Possible reasons of that the government did not spend all the money received from the growing economy but saved it thus curbing inflation. Unemployment rates steadily decreasing due to growing economy (sharp growth of the oil prices).

• 2010 -2013 => There is a negative correlation but as the curves are quite close from each other, the relationship is ambiguous.

• 2006-2010 => The negative correlation is clearly shown on the graph. During these years, we have a great example of the Philiips Curve

Most of the time, the Phillips curve is working. However, since the economic crisis, the relationship is not so obvisous

anymore. It would be interesting to compare the Phillips theory with the current and future data since the

geopolitical situation (ukrainian conflict) could have a direct impact on this relationship.

GMBA-EN-BF-2014 – GROUP C ECONOMIC ENVIRONMENT AND COUNTRY ANALYSIS

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

GDP growth in prices of 2008

Unemployment

OKUN’S LAW

Is there a Relationship Between Unemployment And Losses In GDP in Russia ?

OKUN’S LAW WORKING

• 2006 to 2010 => Significant correlation between GDP and

inflation. the high GDP growth till the half of 2008 lead to

constantly decreasing unemployment levels but during the

financial crisis the decrease in GDP lead to sharp increase in

unemployment.

• 2013 => the Okun’s law seems to work again. To be confirmed in

the next years.

BROKEN OKUN’S LAW

• 2004-2005 => No negative relationship. The excessive money

received from oil were saved but not inflowed in the economy thus

decreasing money supply and limiting GDP growth. But due to the

oil prices were still high, even when the GDP growth decreased

the unemployment did not rise.

• 2010-2012 => No clear negative relationship.

Due to the slow down of the world economy (EU, US) the growth of

Russian GDP had slowed down as well.

However unemployment rate was not increasing because of high oil

prices and high government spending on infrastructure (significant

world summits and Olympiad).

Source : World Bank report

GMBA-EN-BF-2014 – GROUP C ECONOMIC ENVIRONMENT AND COUNTRY ANALYSIS