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This paper diagnoses the present Russian situation characterized as the “Russian Disease.” First, it shows that a key symptom of the Russian Disease is a strong positive relation between the country’s real growth and terms-of-trade-effects, which is different from the symptoms of the “Dutch Disease”. This paper also presents three variants (oil prices, terms-of-trade, and trading gains) of the concept of terms-of-trade effects using the SNA framework. Second, it shows a strong positive impact of terms-of-trade effects on the Russian manufacturing, which markedly differs from one of the major symptoms of the Dutch Disease (slower growth of manufacturing through the booming mining sector and real appreciation of exchange rates). This paper also suggests the significance of the manufacturing industry for the Russian economy. Third, this paper shows that the appreciation (depreciation) of real exchange rates of Russia’s rubles induced the boost (decline) of its imports. Fourth, this paper proves that the boost of imports, in turn, induced the GDP growth of the trade sector as one of the major sources of the Russian overall growth. We also present the impact of oil prices on two kinds of real exchange rates (CPI-based and GDP-based real exchange rates).
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