"Russia's economy has become the largest in Europe and the fifth-largest in the world," claims Vladimir Putin while touring Russia's Far East.
Economist Vyacheslav Shiryayev refutes this information and shared his opinion on the Hodorkovsky.Live channel.
"There is a concept called Purchasing Power Parity (PPP), designed to compare countries by their buying power without comparing the rich with the poor or the poor with the rich. It aims to compare poor countries with poor ones and rich countries with rich ones. Currently, Gross Domestic Product (GDP) is the only indicator used, and by GDP, Russia ranks 8th in the world's economies, 6th in Europe, behind not only Germany but also France and the United Kingdom.
However, the crucial factor is to divide it by the population. If we consider GDP per capita, there are several countries living better than Russia, which Putin does not mention: Palau, Costa Rica, Iran, Panama, Romania, Croatia, Chile, Barbados. Russia ranks around 60-63 according to different calculation methods.
Now, back to PPP. Russia is a poor country, and comparing its PPP with Germany or the USA is inappropriate; the methodology is different. PPP is calculated based on various groups of goods. For example, the Big Mac Index is used, but even Big Mac is no longer available in Russia. The problem lies in the surrogate, as a burger in Germany costs 5 euros, while in Russia, it's 2 euros – completely different things. Putin's comparison is manipulation because many goods are simply not comparable. Comparing a high-speed train in Germany with a shaky electric train that takes you to the Moscow suburbs is comparing different goods or services.
While Russia is the 8th economy globally, when divided by the population, it falls behind the countries mentioned earlier. If Putin says Russia is in 60th place, we will confirm it and hear the truth from him for the first time."
