Trud is a somewhat left of center newspaper. "Trud" means "labor."
Trud October 5, 2001 RUSSIA IS NO LONGER AN ISLAND OF BAD LUCK The global economy is on the brink of crisis - what about Russia's economy? Author: Alexander Dyachenko [from WPS Monitoring Agency, www.wps.ru/e_index.html] RUSSIA IS A WHOLE CONTINENT, SO WE SHOULD STOP THINKING OF RUSSIA BEING UNRELIABLE AND UNSTEADY. WE ARE CAPABLE OF RAISING UP OUR NATIONAL ECONOMY. THE GLOBAL RECESSION WHICH SOME ARE NOW PREDICTING NEED NOT HAVE A DEVASTATING IMPACT ON RUSSIA.
Following the terrorist attacks on the US, rumors about an upcoming crisis in the global economy have started circulating. Does anything pose a threat to Russia? The idea that the world changed on September 11 does not seem to be a good explanation. Let's pose a more specific question: has the situation in the global economy changed? The stock market is a rather sensible economic barometer - it has confidently been displaying not just "bad weather" but a "storm". Could this be a storm in a teacup?
U.S. stock exchanges were closed for a week - unprecedented since World War II. Since American investors are the main players on the market, expecting for their return for the market, the world stock exchanges were cutting the quotes. As soon as the US returned to the world market, the prices of shares merely collapsed.
Within days, share prices have been slightly fluctuating first up, then down, until they stopped on rather low levels. Judging by the stock market alone, another Great Depression is supposed to begin already, with the only difference that unlike in the times of Roosevelt, the world economy is global now; therefore the depression may affect many countries. However, nothing like this is being observed now! The point is that the contemporary stock market is rather emotional and it is an arena for various speculations. This is especially visible in comparison with the hard currency market, with no peculiar events taken place on it. If a calm sets in on the currency market, it has been exactly what could be observed during the days of almost catastrophic collapses of the stock markets and the most pessimistic forecasts. The U.S. financial authorities have been taking stabilization measures: the interest rates have been decreased by 2.5%, and the Treasury sent tens of billions of dollars to support the investments.
The following conclusion suggests itself: nothing cardinally new, moreover any catastrophic, has been taking place in the world economy. A tendency toward a reduction of the growth actually exists. However, it has been observed over a year both in the US and Europe, with Japan having it for a few years already.
As is said, the U.S. economy would grow, based on results of 2001, not by 5%, as in 1999, but by 1% only. What a horror...
As is already witted, the newest Russia has two calamities: fools and low oil prices, with the latter being not dependent on Russia. Moreover, they have started to decrease, what can potentially threaten the welfare of the Russia's 2002 budget.
Energy resources are goods for stock markets, besides they are politically important, and if the price for these goods falls now, a possibility that it may increase in the future increases considerably. A scientific method, by means of which similar phenomena are investigated, is called proximate market analysis.
Furthermore, over the past few years dependence of Russia's economy on the oil prices has subsided. As Deputy Chairman of the Duma committee for budget and taxes Mikhail Zadornov thinks, even with the oil price of $12 a barrel Russia would have a budget surplus within the next few years, being at the same time able to service its foreign debt. The thing is that the economic growth continuing in Russia has been resting on the internal resources and on the growth of the internal demand both already.
Among the wise "gurus", owing to whom we have economic growth, some experts name Victor Gerashchenko, who was not afraid to claim responsibility and satiated the zealous economy with rubles.
According to the estimates of Deputy Prime Minister Alexei Kudrin, Russia's GDP will increase by 5.5% at least, based on results of 2001. Next year, according to IMF experts, the economic growth in Russia slow down to... 4%, given that no economic growth may be observed in some other countries. Real incomes in 2002 will increase, according to a forecast of the Economic Development Ministry, by 6%.
Let's note the following figures. The scope of job, executed on construction contracts in Russia in January-August 2001 has exceeded the level of January-August 2000 by 7.6%, and exceeded the level of January-August of 1999 by 12.1%. This August the size of contracted work exceeded the level of last August by 12.2%. But construction industry is the backbone of the economy.
An opinion of Yuri Maslyukov, chairman of the Duma committee for industry, construction, and high technologies, who cannot be blamed for incompetence or carefree attitude, is rather exponential. As he thinks, "Russia's economy continues to improve with confidence, though at a decreased rate." Next year this growth, according to his assessment, will be around 3-4%.
In a word, it is high time we stopped thinking that we live on "an island of bad luck." Russia is not an island, but a whole continent. One can be certain of its reliability and stability, despite the disorder around the world. (Translated by Andrei Ryabochkin)