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Saturday 20th of April 2024, 00:16 CET |
| Russia: Economic Forecast |
October 17, 2002
Economist
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Written by Economist Intelligence Unit
Posted by HW on April 19, 2024
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Vladimir Putin, Russia’s president, will ensure his continued popularity by prioritising Russia’s economic needs. This may be one reason that Mr Putin opposes the use of force in Iraq: Russia’s oil dealings with Iraq are lucrative, and Iraq owes it $8 billion in sovereign debt. Russia’s reluctance could cool the friendship between America and Russia, especially if it vetoes a UN Security Council resolution authorising force; such cooling would delight the many conservative forces in Russia, such as the military. Russia’s assent at the UN, however, may be secured with American promises to protect its interests in Iraq. In any case, Russia’s powerful diplomatic position will be to its material advantage. The government is fast losing hope about its target date of 2003 for WTO accession, as many additional reforms are needed: corruption and a stifling bureaucracy still hamper foreign investment. While Mr Putin has pushed through important liberalising reforms, enforcement is too often lax. Forecasters polled by The Economist expect GDP to grow by 3.9% in 2002 and 4.2% in 2003, with current-account surpluses of 6.8% and 5.1% of GDP, respectively.
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Key changes from last update
Political outlook
Mr Putin’s hold over Russia’s regional governments, already strong, could become stronger still if two bills before the Duma pass. One would give the federal government more control over tax revenues; another would allow Mr Putin to fire regional governors more easily.
Economic policy outlook
Russia’s removal from the Financial Action Task Force’s blacklist of countries that are un-co-operative in fighting money-laundering may encourage foreign investors. In the wake of the decision Mr Putin has also urged liberalising hard-currency transactions.
Economic forecast
The Economist Intelligence Unit forecasts consumer price inflation of 15.7% in 2002, falling to 13.0% in 2003 and 11.0% in 2004. |
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