The massive brain drain in Russia is destroying the economy

• Russia’s war on Ukraine has fueled a massive brain drain, which is crippling Putin’s economy.

• According to some estimates, 80% of those who left Russia have a university education, and 86% of them are under the age of 45.

• Russia’s GDP, measured at purchasing power parity, is expected to lag Indonesia’s in 2026.

Russia’s war on Ukraine has caused a massive brain drain, and the toll it will take on the economy is coming into sharper focus.

Since Vladimir Putin launched the invasion in February 2022, migration out of Russia has increased Some estimates put the mass exodus at up to a million people. Recent analysis from Politics Platform Re: Russia The number narrowed to 817,000-922,000.

This contributed a Employment shortage recordWith 42% of manufacturing firms unable to find enough workers in July, up from 35% in April.

The makeup of mass migration in Russia also suggests that the best and brightest have fled the country. While the barrage of Western sanctions encouraged many to leave for economic reasons, others fled to avoid it Military serviceskewing the numbers towards the younger Russians.

Workers under the age of 35 now account for less than 30% of the labor force, the lowest level in 20 years.

And according to a report from French Institute of International Relations86% of those who left Russia are under the age of 45, and 80% have a university education. At least 100 thousand IT professionals will leave Russia in 2022, A Kremlin official estimated it last year.

In addition, the data also shows that the Russians who fled were significantly wealthier, with nearly 11.5% of the personal savings that were in Russian banks at the end of 2021 being transferred abroad in 2022, amounting to about $4 trillion. rubles ($41.5 billion).

The shrinking number of skilled professionals does not bode well for the Russian economy. When highly skilled workers leave, so do economic opportunities, which would raise living standards in Russia to those of other former Soviet states. Atlantic Council said in a report.

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Without immigration to fill the labor gap, coupled with declining birth rates, the Russian economy is expected to contract.

Indeed, the Atlantic Council has estimated that Russia’s GDP, measured at purchasing power parity, will lag behind Indonesia’s in 2026, roughly two years earlier than it would have been had Putin not launched his war on Ukraine. By then, they will have swapped places as the world’s sixth and seventh largest economies in terms of purchasing power parity.

To be sure, Western sanctions that limit Russia’s access to advanced technologies will also affect GDP. But in the comparison with Indonesia, the report points to a common defining factor.

“But Russia’s decline and Indonesia’s rise have been driven largely by the same thing: people. Russia is experiencing severe brain drain while Indonesia’s labor force is growing,” the council wrote.

“In particular, the educated professional class is growing in Indonesia while the professional class is shrinking in Russia. It is this contradiction that makes their interchangeability, which will soon be included in the list of the largest economies in the world, remarkable. The world’s economic center of gravity is shifting.”

Not only is Indonesia’s labor force increasing, but the influx of highly skilled workers has helped boost private consumption standards in the country, he added.

As a result, the council said, China is paying attention to Indonesia’s growing spending capacity, and trade relations between the two countries are likely to strengthen. This may further darken growth prospects for Russia, which is experiencing rapid growth Trade dependent With Beijing since the beginning of the war.

“Although Russia may be an important export market for Chinese producers at present, as it rushes to fill remaining gaps as Western companies withdraw, its long-term growth prospects are stagnant at best, and most likely negative,” the report said.

Read the original article at Business interested