IS RUSSIA’S LONG-AWAITED ECONOMIC RECOVERY BEGINNING?

A Goskomstat (State Statistical Office) report released in late February suggests that the declines in Russia’s gross domestic product (GDP) and industrial output may be coming to an end. Goskomstat figures indicate that industrial production during January was slightly (0.3 percent) above January 1996 levels, and GDP is estimated to have increased as well. Growth in industrial output was led by tractor and automobile production (up 34 and 30 percent, respectively, over January 1997 levels) and the machine building sector (up 7 percent), as well as by growth in personal computer production (100 percent), and motorcycles (320 percent). Although the large underground economy is widely believed to cause official statistics to understate the extent of economic activity in Russia, news of an imminent official upswing has been eagerly awaited by the government for years. It was the Goskomstat figures that apparently led Prime Minister Viktor Chernomyrdin to say that he is optimistic about Russia’s economic situation. "For the first time in over ten years, we see a tendency towards the better to have emerged," he told reporters on February 25.

But, while hopes that Russia’s seven-year economic slide may have ended are alluring, signs of trouble continue to abound. The results of a survey of 200 industrial enterprises conducted by the "Russian Economic Barometer Service," released on February 28, indicate that industrial orders in January had reached a two-year low, while the Goskomstat report indicated that fixed investment in January was down 9 percent from its January 1996 level. Although tax revenues collected in January 1997 were 26.3 percent above the target (10.1 trillion rubles) level, wage arrears continued to increase. And while Russia’s exports (measured in dollar terms) in January were 2 percent higher than January 1996 levels, dollar imports declined by 16 percent, a drop that is difficult to square with reports of growing output. (Itar-Tass, February 25; Interfax, February 28; Rossiyskaya gazeta, February 22)

Academician Shatalin Dies.