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@Russia:Economy
Economy-overview: Russia, a vast country with a wealth of natural resources, a well-educated population, and a diverse, but declining, industrial base, continues to experience formidable difficulties in moving from its old centrally planned economy to a modern market economy. After seven consecutive years of contraction 1990-96 in which GDP fell by one-third, GDP grew by 0.4% in 1997, according to official statistics. Moscow continued to make strides in its battle against inflation, which fell to 11%, half the 1996 rate. The central government made good on most back wages owed public-sector employees-including the military-although the stock of wage arrears to employees of private enterprises remained large. Privatization revenues increased significantly, largely on the strength of a few high-profile tenders, such as that of telecommunications giant Svyazinvest. On the downside, Moscow continued to struggle with a severe fiscal imbalance. Lagging tax collections led the government to adopt a revised budget in spring 1997 that cut spending by about 20% despite protests from the legislature. Russia's traditional trade surplus continued to contract-largely because of soft international commodity prices-and Moscow's WTrO accession made only halting progress. Although President YEL'TSIN brought in a new economic team early in 1997, key structural reform initiatives continue to move slowly. A revised tax code remains stuck in the Duma, while little progress is being made on agricultural land reform. Small business development has lagged. Prospects for a return to robust growth have been set back by the spillover from Asia's financial turmoil, which hit Russia hard during the last quarter of 1997. Moscow at first tried to both support the ruble and keep interest rates down, but this policy proved unsustainable, and in early December 1997 the Central Bank let interest rates rise sharply. As the year ended, Russian authorities were attempting to put the best face on the financial situation, while at the same time scaling back their previous optimistic growth projections for 1998 to 1%-2%. Because of Russia's severe macroeconomic constraints, resources allocated to the military sector have declined sharply since the implosion of the USSR in December 1991.
GDP: purchasing power parity-$692 billion (1997 est.)
GDP-real growth rate: 0.4% (1997 est.)
GDP-per capita: purchasing power parity-$4,700 (1997 est.)
GDP-composition by sector: agriculture: 7% industry: 39% services: 54% (1996)
Inflation rate-consumer price index: 11% (1997 est.)
Labor force: total: 66 million (1997) by occupation: NA
Unemployment rate: 9% (1997 est.) with considerable additional underemployment