INTELLINEWS
The Russian economy has overtaken Japan to become the fourth largest in the world in PPP terms (purchase power parity), according to revised data from the World Bank released at the start of June.
As bne IntelliNews reported in August, Russia had already overtook Germany to become the fifth biggest economy in adjusted terms. Hit by multiple shocks recently and cut off from cheap Russian gas, Germany is now stagnating and has fallen to sixth place in the World Bank’s ranking.
PPP GDP measurement is preferred by many economists, as it takes into account the difference between local prices and nominal prices similar to The Economist’s famous Big Mac index: a burger in Moscow costs about half as much as the same burger in New York.
The World Bank improved Russia’s ranking after revising its data and says that Russia actually overtook Japan in 2021 and has maintained its position as number four since then. Its previous calculations were based on 2017 data but have now been updated to reflect 2021 figures.
Previously, Russian President Vladimir Putin set his government the goal of producing economic growth ahead of the global average. Before the war in Ukraine started, Russia’s economic growth was well behind that of the global average and close to stagnation. However, following the invasion of Ukraine in 2022, the economy has been enjoying a military Keynesianism boost and is currently the fastest growing of any major economy in the world.
And Russia has overtaken Japan ahead of schedule. Putin explicitly set his government the goal of attaining fourth place among the world’s largest economies in terms of PPP earlier this year, and the Cabinet was instructed to prepare measures to achieve this goal by March 31, 2025.
