The World Bank (WB) has recently classified Russia as a high-income country. The document has been published on the WB website. In addition to Russia, Bulgaria and Palau have been included in this category.
According to World Bank criteria High-income countries are states where the gross income indicator is at least $13,845. per annum.
On 1 July the World Bank moved Russia from the category of countries with above-average incomes to that of high-income countries. According to the watchdog, Russia's increased economic activity is linked to the growth of revenues in the military sector. This puts the Russian Federation on the same - and highest - list as the United States, Canada, Australia, Japan, Saudi Arabia and most European countries.
The recovery of the trade and financial sectors of the economy also had a positive impact, the WB said. This led to growth in nominal and gross domestic product (GDP). According to the World Bank, these indicators grew by 3.6% and 10.9% respectively. The national income increased by 11.2%.
Earlier, on 11 June, the World Bank predicted global GDP growth of 2.6% in 2024. Forecasts for Russia's GDP have also been revised upwards. According to experts, the Russian Federation's economy will grow by 2.9% in 2024, 1.4% in 2025 and 1.1% in 2026. At the same time, in April the Bank's experts forecast economic growth in the Russian Federation of 2.2% in 2024 and 1.1% in 2025.
How is a country's income level calculated?
The World Bank classifies countries into four income groups:
High;
Above average;
below average;
low.
According to the World Bank's classification, high-income countries are those with a gross national income (GNI) per capita of more than $13,845. GNI is the total value of all goods and services produced in a country during a year. This indicator does not reflect the real income of the population. The classification covers sovereign states with a population of more than 30,000.
Gross national income is calculated according to the Atlas method, which uses a conversion factor based on the average exchange rate of a country for the current year and the two previous years, adjusted for differences in inflation rates.
In 2024, three countries enter the high-income category at the same time: Russia, Palau and Bulgaria. Previously, the countries were classified as upper middle income. In 2023, Russia's GNI per capita rose to $14,250. A year earlier, it was $12,830.
The regions where income levels fell were the West Bank and Gaza. The World Bank notes that the scale of the conflict between Hamas and Israel led to a 9.2% fall in nominal GDP.
On 29 February 2024, during his address to the Federal Assembly, Russian President Vladimir Putin set a goal of reaching fourth place in the GDP rankings by 2030, but this was achieved ahead of schedule.
In April 2024, the World Bank presented updated estimates of countries' GDP in purchasing power parity, which showed that Russia had overtaken Germany and Japan to take fourth place in the list. China tops the list, with a GDP of $35 trillion last year.
According to RIA Novosti calculations, Russia regained this position in 2021, overtaking Japan and Germany. At that time, the country's share of global GDP was 3.8%. Domestic GDP at PPP reached $5.7 trillion in 2021. In 2022, the Russian economy grew to $6 trillion and in 2023 to $6.45 trillion.
In particular, during the pandemic, the Russian Federation adopted "anti-crisis" packages of measures aimed at supporting citizens and businesses, recalls the head of the Ministry of Economic Development. "Support measures were focused on the most affected industries and SMEs. This allowed us to preserve businesses and jobs," emphasises Reshetnikov.
In 2024, three countries enter the high-income category at the same time: Russia, Palau and Bulgaria. Previously, the countries were classified as upper middle income. In 2023, Russia's GNI per capita rose to $14,250. A year earlier, it was $12,830.
The regions where income levels fell were the West Bank and Gaza. The World Bank notes that the scale of the conflict between Hamas and Israel led to a 9.2% fall in nominal GDP.
On 29 February 2024, during his address to the Federal Assembly, Russian President Vladimir Putin set a goal of reaching fourth place in the GDP rankings by 2030, but this was achieved ahead of schedule.
In April 2024, the World Bank presented updated estimates of countries' GDP in purchasing power parity, which showed that Russia had overtaken Germany and Japan to take fourth place in the list. China tops the list, with a GDP of $35 trillion last year.
According to RIA Novosti calculations, Russia regained this position in 2021, overtaking Japan and Germany. At that time, the country's share of global GDP was 3.8%. Domestic GDP at PPP reached $5.7 trillion in 2021. In 2022, the Russian economy grew to $6 trillion and in 2023 to $6.45 trillion.
The economic growth that allowed Russia to enter the top 4 was achieved thanks to prompt and systemic measures taken on the instructions of the President, notes Minister of Economic Development Maxim Reshetnikov.
In particular, during the pandemic, the Russian Federation adopted "anti-crisis" packages of measures aimed at supporting citizens and businesses, recalls the head of the Ministry of Economic Development. "Support measures were focused on the most affected industries and SMEs.
This allowed us to preserve businesses and jobs," emphasises Reshetnikov.
So why is Russia's economy booming?
What are the reasons for this optimism and why is the Russian industry growing at such a fast pace?
A number of key factors are driving industrial and economic growth. It is also worth noting the increase in government spending on the purchase of industrial products, including military products.
Furthermore, there has been a notable increase in investment in the creation of new industries and the development of existing ones. Furthermore, there has been an increase in non-resource exports and an increase in household spending, which has been combined with an increase in savings.
This ensures the long-term nature of this demand.
In other words, the population is supporting the demand for domestic industrial products.
At SPIEF, there was a discussion about how to fill the market with goods. Imports are one option, but this would require us to work for imports. This is not a necessity. "The development of domestic industry and the production of consumer goods meets this demand from the population," Alexey Zubets, director of the Institute of Social Economic Research at the Rusian Financial University
Consequently, exports (including non-raw materials) maintain a positive trade balance. Russia has the financial resources to purchase abroad those components that have not yet undergone import substitution, as well as the means of production, including machines and equipment for new domestic factories. The trade surplus increased by 18.8% in the first four months of the year, reaching $50.5 billion.
The achievement of a balanced trade balance is largely dependent on the restoration of non-resource exports. This reduces Russia's reliance on global pricing for hydrocarbons.
So Russia has now managed to balance its economy so it is neither dependent on the price of commodities on Western Mercantile Exchanges or on Western Financial Markets, its borrowings unlke its Western enemies are relatively low and its currency is far from being Rubble but stable and Its economy is buoyant and continues to grow.
The future looks bright for Russia and its people.