Chris Doss The Russia Journal ----------------------------
Kommersant March 26, 2002 RUSSIA'S ECONOMY: NOT GROWING, SHRINKING Statistics say Russia's economy is still heavily dependent on oil prices
Author: Nikolai Vardul [from WPS Monitoring Agency, www.wps.ru/e_index.html] THE GOVERNMENT HAS BEEN HOPING THAT THE FALL IN GLOBAL OIL PRICES WOULD HAVE AN EFFECT ON RUSSIA'S ECONOMY COMPARABLE TO BEING CURED OF DRUG ADDICTION, AND WOULD SPEED UP RUSSIA'S DEVELOPMENT. THERE IS NO SIGN OF THIS AS YET. THE ECONOMY IS STILL DEPENDENT ON GLOBAL OIL PRICES.
On March 25, the Economic Development Ministry presented an account of the economic situation in February.
February is a peculiar month, not only because is it shorter than any other month but because after January, which is usually "not quite sober" in Russia, the rate of development of the economy starts to increase. That is why the Economic Development Ministry pays special attention to February's statistics. As "Kommersant" has reported already, the ministry has found out that in February, the economic growth in 15 basic branches of industry was 0.7% compared to January. However, later it was announced that this growth is not favorable for the concept of economic growth.
At first, reports of news agencies were promising, if not exulted: the growth of the GDP in 2002 has been 3.2%, and in February alone this figure was 3%. However, this figure sounds promising only for those who have forgotten that the government has envisaged the growth of the GDP in 2002 as 4-4.5%. Thus, the index of the growth of the GDP in February lags behind the schedule.
Then it turned out that the State Statistics Committee has calculated that in five basic branches of Russia's economy (but not 15 as had been initially reported) - industry, construction, agriculture, transport, and retail trade - the economic growth in February 2002 was 2.8% compared to February 2001. However, the State Statistics Committee states that the output in these branches dwindled by 1.7% in February compared to January 2002. Keeping in mind that there are fewer days in February than in any other months, statisticians calculated that the average daily output in February, with the season allowance, was 99.5% compared to January 2002.
Three conclusions may be drawn from this situation. The first conclusion is that the government failed to stop the decline of production in February, which means that the Russian economy has been declining for five months already. The second conclusion is that the government is hoping to save the Russian economy from a crisis at least in March if it has failed to do it in February. The third conclusion is that the growth of the Russian economy stopped just when oil prices collapsed. If the government manages to amend the situation in March, this will be because oil prices have started to rise this month. In other words, the hope that a decline in global oil prices would have an effect on Russia's economy comparable to being cured of drug addiction - as Presidential Adviser Andrei Illarionov put it - as well as dreams that this would speed up the nation's development - are not coming true yet. The Russian economy is still regulated by world oil prices. (Translated by Kirill Frolov)