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Russia's Economy Posts Solid Gain
December 27, 2001
By JUDITH INGRAM
MOSCOW (AP) - Russia's economy grew by more than 5 percent this year, recording a solid gain while other economies around the world struggled, Russia's prime minister said Thursday.
``This isn't a bad rate, it's one of the highest growth rates in the world, despite an essential recession in world economic growth in the second half of the year,'' Mikhail Kasyanov told the Cabinet.
Growth in 2000 was higher at 7.6 percent, a strong jump from the 1.8 percent rise in 1999 - the country's first increase in gross domestic product after a decade of decline.
Russia's economic growth was slowed this year by a drop in export prices, particularly for energy, metals, chemicals and petrochemicals - contributing to a 3 percent drop in exports for the year.
Kasyanov said that Russians' real income had increased by 6 percent but that rising consumer demand fueled an 18 percent growth in imports. He faulted what he called a lack of competition among many Russian industries.
``The dependence of the Russian economy on exports is decreasing, but still remains high and we must pay special attention to this,'' he said.
Economists have stressed the need to diversify Russia's revenue sources, to wean the state from its overwhelming dependence on oil and natural gas. But Kasyanov emphasized the importance of two new fuel export routes that were started in 2001: the Blue Stream gas pipeline crossing the Black Sea to Turkey, and the Baltic Pipeline System, which will allow Russian oil exporters to decrease petroleum shipments through the former Soviet republics in the Baltics.
Despite the fall in energy prices, Russia's natural gas monopoly saw record high export profits of $14.5 billion in 2001. In a statement, Gazprom said its long-term contracts, worth $250 billion guaranteed Russia one-quarter of the European gas market for the next 10-15 years.
Kasyanov said that the government expected 4 percent GDP growth in 2002 but that it would have to revise its forecast if the price of Urals crude oil drops below $14 to $15 a barrel. He said that the ideal price for Russia was $18.50.
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