NEW RUSSIAN GDP DATA RELEASED…

In April, the Russian statistical agency Goskomstat released new data on Russian economic growth during 1996-1999. In addition to providing quarterly figures on changes in the components of Gross Domestic Product (GDP) for this period, this release provides a broader picture of the trends behind Russia’s economic recovery since mid-1999.

These figures show GDP growth accelerating from 1.2 percent during the second quarter of last year to 6.7 percent in the third quarter, and to 7.3 percent in the fourth quarter. The industrial sector’s contribution to the recovery is clear, as growth in industrial value added rose from 5.0 percent in the second quarter to 16.3 percent in the third quarter, before dropping back to 11.4 percent in the fourth quarter of 1999. This yielded 8.0 percent growth in value added produced in industry in 1999. Value added in the transport and communications sectors also surged 9.5 percent in 1999, up from 3.4 percent in 1998 and 1.9 percent in 1997. Although value added in the trading sector was reported down 3.4 percent last year, a strong recovery was apparent in the second half of last year: Growth in this sector was 7.3 percent in the fourth quarter.

Expenditure data show that Russia’s 1999 recovery was primarily powered by net exports (export minus imports). Whereas the volume of exports was reported up 4.5 percent last year, import volumes were listed down 13.2 percent (Adjusting these data to take estimates of under- and over-invoicing into account doubles the growth in export volume and the decline in import volume.) Investment was listed as up by 9.3 percent last year, due to growth in both fixed investment and inventories. While public consumption remained unchanged, household consumption fell by some 5.3 percent in 1999.

Needless to say, Russian national economic accounting is far from perfect. Although Goskomstat boosts reported GDP by 30 percent to take into account its estimates of the informal sector, many types of economic activities are not captured by the official numbers. Likewise, Goskomstat is hardly above reproach as an institution: A high-ranking Goskomstat official in 1997 was fired and subsequently prosecuted for fiddling with the official data to reduce the tax liabilities of selected companies. But while these problems may significantly distort reported levels of economic activity in Russia, such statistical shenanigans are less likely to affect reported output trends, as long as the degree of falsification does not change dramatically from year to year.

…SHOW RECOVERY CONTINUING INTO 2000…