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Russian economy can develop on its own - economist
MOSCOW. Dec 31 (Interfax) - The Russian economy demonstrated in 2001 that it could develop on its own without foreign donations, said Yevgeny Yasin, a noted economist in charge of scientific research at Russia's High School of Economics.
He regards past year results as sound "above all because the pessimistic forecasts made at the start of the year have come false and additional factors of quite high rates of growth have been at work actually throughout the year." GDP by the end of the year statistics is expected at a level of 5.6%, although no more than 3% were predicted at the start of the year.
One of the growth factors is above all increased domestic demand, which was a propellant for the Russian economy throughout the year. "This is very indicative because when internal demand is switched on, this means that the development propellant is in motion". "This means that for the first time this year we see a situation with the economy advancing by its own resources," said Yasin.
National currency devaluation or higher oil prices are external factors, which are stimulating, but "they peter out once the situation changes." At the same time, "internal demand is a far more stable thing," said Yasin.
Andrei Neshchadin, the executive director of the Institute of Experts, believes that the overall slow down of world economic growth has hardly had any effect on Russia. "The year has been not bad at all but it cannot be said that all opportunities for successful economic growth have been tapped." "The lack of a sufficient array of financial and economic instruments has had its impact," said the economist.
He explained that an attempt had been made this year to infiltrate inn the grain market, however, nothing has come out because there has actually been no market. "There has been no grain stock, no forward deals, no regulative legislation and lots of market instruments have existed on paper so far.
Andrei Klepach, deputy head of The Development Center has told Interfax that "this year has proved to be much better than most economists expected. "GDP growth is at 5.5% and may be at 5.8% by the end of the year and this is a good result," said he.
"If not for the favorable situation on the foreign market, the results would have been much worse," he added.
There is also a significant internal factor that influenced annual results. "Central policy taking incomes out of shadow and hiking budget workers' wages and pensions, playing a very substantial role," stressed Klepach.
He noted that "the population has provoked a consuming boom." In this respect, the government by its program of increasing wages in the budget sector and raising pensions have done quite a lot for making the consuming boom spread not only to high-income earners but to the majority of the population," said the economist.
Klepach believes that "in regard to the investment process, the government has made no positive contribution at all." Despite the continuing growth of investments, expected at around 9% by the end of the year against 17.4% last year, their structure is very alarming since throughout these two years investments have been growing at the expense of the oil and gas sector, steel-smelting, transport, and housing construction," he remarked.
He believes that "the growth of budget revenues, which has been received and which is a significant government achievement indeed, is being used above all for solving the foreign debt problem, which is wise, but it is making no direct contribution to economic growth."
The economist recalled that the government had made a number of strategic decisions, crucial for the country not only this year but within the coming ten years. These decisions have given rise to reforms in the banking sector, Russia's Unified Energy System, Rail Ministry, and Gazprom.
"Although the strategic decisions basically make sense, their implementation arouses many questions and could seriously slow down economic growth within the coming years," Klepach predicted.
The natural monopolies' investment programs are one of the key levers the government has for 2002 and years ahead to maintain investment growth and economic growth as a whole.
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