Mobilization will have a positive impact on unemployment and Russia's GDP

Dmitry Nekrasov, political analyst

Answering questions like “how will mobilization affect the Russian economy?”, I came to the conclusion that indicators familiar to us like GDP or unemployment have completely different meanings in economies that produce mainly things for the convenience of individuals (consumer goods and services) and in economies that producing a lot of conditionally consumer useless.

To illustrate, let's start from the example of the late USSR. There was no unemployment in it, and even the GDP continued to grow at the very least. However, the volume of utilities (goods and services) that an ordinary Soviet person could consume did not increase or even decreased. In the early 90s, unemployment jumped up and GDP fell sharply, but the amount of utilities consumed by the population at least did not decrease, but rather increased (albeit it began to be distributed less evenly).

A similar story with the special operation. How will mobilization affect unemployment? Obviously lower. I said in March that there is no unemployment in a country that is fighting, and this is the last thing that threatens the Russian economy, and now the military registration and enlistment offices will withdraw an additional 200-300 thousand people from the already declining due to the demographics of the labor force.

How will the mobilization and expansion of the military order affect GDP? Also positive! The state makes additional demand at all levels. This applies not only to the production of weapons, but also to the additional demand for construction work, medical services, logistics and the list goes on. A huge number of businesses receive additional orders and expand output. Especially in Russian conditions, when the budget has accumulated significant financial reserves and it is not necessary to borrow much to expand state demand, any mobilization measures are a definite plus for GDP (up to certain limits, but they have not yet been achieved).

Only at the same time it is also obvious that all these measures will affect the quality of life of the population and the utilities consumed by it only negatively. That part of the economy that is focused not on final consumer demand, but on the production of things that are completely useless (and even harmful) from the consumer point of view, will grow.

Therefore, I urge journalists, when analyzing the state of the Russian economy, to stop focusing on indicators that adequately describe the state of peacetime, but set the wrong optics in the military.

If they ask me about unemployment and GDP, then I have to honestly answer that unemployment in the Russian Federation is at historical lows, and GDP will decrease much less significantly due to a special operation than it would have decreased only from sanctions in the absence of a special operation.