Russian economy grew by more than 7 % over first half of this year

Jul 31, 2000 02:00 AM

Russia's economy grew by more than 7 % over the first half of this year, a top Cabinet member said easing down fears that economic growth is reducing. Vice Premier Viktor Khristenko announced the latest economic indicators after a weekly Cabinet session headed by President Vladimir Putin.
Next year's budget topped the meeting's agenda. Russia's top statistician echoed Khristenko's optimism. "In the first half of the year almost all indicators were positive," State Statistics Committee chairman Vladimir Sokolin told. Khristenko said inflation for July would not exceed 1 %, and that the yearly inflation rate would be 18 to 20 % - instead of the 35 % that experts predicted after prices surged by 2.6 % in June.
Sokolin said that industrial production was up 10 % in the first six months of 2000, and that investment was up 14.2 % from last year. But he projected inflation for June at 2 %. Personal income and spending are also climbing, though most of Russia's wealth is still concentrated among a small portion of the population, Sokolin said.
According to the State Statistics Committee, the average monthly wage in June was 2,290 rubles, or $ 82. That is up from 1,578 rubles a year earlier, which at the time was worth about $ 66.
Russia's economy has enjoyed a boost over the past year, following the 1998 financial collapse and a decade of almost constant decline. Rising oil prices have helped, since Russia is a major oil exporter, and a lower ruble has aided domestic producers by making imports more expensive.
But the ruble has been climbing against the dollar, analysts warn that oil prices are due to fall, and investors say deep structural changes are needed for the economy to thrive. Economics and Trade Minister German Gref said in an interview published that growth in 2001 would be lower than this year. "The economic dynamics of recent months are forcing us to clarify the parameters of annual inflation, GDP growth (and) the ruble rate" for the 2001 budget, he told.
The Cabinet meeting also discussed this year's harvest, Khristenko said. Khristenko is leading the government while Prime Minister Mikhail Kasyanov is on vacation. Russia's harvest has been dismal for the past two years and prompted food aid from the West. This year's harvest is projected to be better, but still well below average.
The budget discussion came after the upper house of parliament passed a new tax code that Putin says is necessary to improve the economy. He says the code, which includes replacing the progressive income tax with a flat, 13 % tax, will reduce rampant tax evasion and spur investment.

Source: AP
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