Publication: Russia and Eurasia Review Volume: 1 Issue: 4

By Aleksandr Buzgalin

Is Russia’s economy expanding or contracting? The indicators point both ways. Today’s apparent equilibrium is unstable, and the government, out of caution or fear, hesitates to act.

While President Putin and others demand more ambitious targets than the government’s 2002 growth projection of 3.5 percent-4.5 percent [see “Who’s Driving the Economy” by Elena Chinyaeva, RER, June 18, 2002], the Russian economy has not been growing at all. GDP fell at the end of 2001 and recorded losses in January, April and May, leaving negative growth over the first five months of this year. Even so, year-on-year, through five months of 2002 industrial production was up 3 percent, investment grew 1.7 percent, and real incomes rose 8.7 percent.

Which trends predominate? Will there be renewed economic growth, or will the domestic market face another squeeze?