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Q: economic growth in Russia in 2002 ( Answered,   1 Comment )
Subject: economic growth in Russia in 2002
Category: Business and Money > Economics
Asked by: industrious-ga
List Price: $10.00
Posted: 14 Jun 2002 05:45 PDT
Expires: 21 Jun 2002 05:45 PDT
Question ID: 25720
What are the weaknesses and problems in the Russian economy which
could hinder it's economic growth in the year 2002? In particular,
what factors could hamper the sale of consumer goods and services in
the Russian economy in 2002?
Subject: Re: economic growth in Russia in 2002
Answered By: fugitive-ga on 14 Jun 2002 08:30 PDT

The United States Department of State puts out, and regularly updates,
a number of documents that analyze the economic status and outlook for
many of the world's countries. Russia, being large and important, is
well covered.

I would suggest two approaches to understanding this issue. First, use
the information in the documents below for US based in-depth
projections and analyses fro Russia from mid-2001 to early 2002.

	US Department of State Background Notes: Russia (November 2001)

	Russia: Country Commercial Guide FY2002 
	(use link below and select "Russia")

These two resources are among the most thorough guides available for
analysis of Russian economic growth.

Second, utilize online resources to keep abreast of current
developments. The following Google link will list a number of Russian
news sources in both English and in the Russian language:

You can choose from any, but I would recommend for day-to-day updates
on Russian economic and consumer issues:

        The Moscow Times (English language daily)

It has the look and feel of most major English language newspapers

Also listed from the main link, you can find a site which looks at
economic analysis of Russia alone:

	Marketing Russia

At Marketing Russia you'll find a VERY concise (9 page), current, and
useful resource by the Interactive Research Group: RUSSIAN ECONOMIC
REVIEW. The issue available today is for February of 2002 and was
released February 28, 2002.

The main variables with regards to consumer spending (and the Russian
economy in general) concern inflation, Gross Domestic Product, and
exchange rates. The IRG projects inflation for the coming year to be
17 percent. Their analysis for inflation is more pessimistic than the
official government stance (12 percent inflation) and raises concerns
of a tighter monetary policy in order to reign in inflation.

"It should be mentioned here that very tight monetary policy can lead
to negative effects when companies and people have no spare money to
invest and spend. This is a very dangerous threat as Barter and
non-payments could increase again." (p. 4)

With regards to exchange rates, the ruble continues to strengthen
against the dollar, thus indicating problems with imports and exports
(i.e., a strong ruble means Russian goods are more expensive and thus
more difficult to export; conversely, imported goods are more

This is the sort of question for which an answer can go on forever.
Please let me know if you need any clarification in a specific area or
with a specific idea. If there's a context (course work, research,
you're opening a business in Russia, etc.) let me know. I'm pretty
sure if you consult the documents I've listed above that you should
get what you need, and get it from fairly authoritative resources.

To give you an idea of the type of information you'll get from these
items, here's the US Dept. of State Background Notes entry on the
Russian Economy:

"The Russian economy has undergone tremendous stress as it has moved
from a centrally planned economy toward a free market system.
Difficulties in implementing fiscal reforms aimed at raising
government revenues and a dependence on short term borrowing to
finance budget deficits led to a serious financial crisis in 1998.
Lower prices for Russia's major export earners (oil and minerals) and
a loss of investor confidence due to the Asian financial crisis
exacerbated financial problems. The result was a rapid decline in the
value of the ruble, flight of foreign investment, delayed payments on
sovereign and private debts, a breakdown of commercial transactions
through the banking system and the threat of runaway inflation.
However, Russia appears to have weathered the crisis relatively well.
Real GDP increased by the highest percentage since the fall of the
Soviet Union, the ruble stabilized, inflation was moderate, and
investment began to increase again. Russia is making progress in
meeting its foreign debts obligations. In 1999, with limited access to
financing from international financial institutions or bilateral
sources, the Government of Russia serviced around half its external
debt payments due, and sought delays in servicing Soviet-era debt
pending negotiations in the Paris and London Clubs. In early 2000
Russia negotiated a 35% write off of its commercial debt with the
London Club. Russia's current Paris Club agreement expires at the end
of 2000."

There is LOTS more where that came from!


Request for Answer Clarification by industrious-ga on 16 Jun 2002 02:10 PDT
Hi Fugitive-ga,

First let me tthank you for your answer. i am currently working
through the links and hope to find what I need. For some reason i cant
seem to find the 9 page paper from IRG. I can get into the site, but i
cant seem to find the paper.

Also, by way of background, I am writting a short piece describing the
pessimistic prospects of consumer growth in Russia in 2002. I really
only need 1 or 2 paragraphs to state in a short sound-bite what the
factors are which may lead to such a pessimistic result.

Thank you.

Clarification of Answer by fugitive-ga on 17 Jun 2002 12:04 PDT
I've had some problems recently loading up the entire IRG Russian
Economic Review document also, but recently was able to get a clean
download. The copyright notice states that the entire document may be
reprinted in part or in whole so long as the IRG is credited as the
source and the IRG web logo at is printed. So,
you should be able to get an easily accessible, and legal, copy here:

Here's the full citation:

   Gregory Thain and Alexander Utochkin. Russian Economic Review-
   February 2002. Moscow : Interactive Research Group, Feb. 2002.

   Original URL:

   Another "original" URL:

With regards to your need for a couple of paragraphs of soundbites,
here are a couple ideas based on the above report (with pages cited):

The Interactive Research Group (IRG) in their February 2002 report
indicate an inflation rate for 2002, or increase in the Russian
Consumer Price Index (CPI), of %16-%17. The real increase in CPI could
be even greater due to "tariffs introduced by monopolistic utilities"
which would not be reflected in the CPI. (p. 4)

The IRG indicates that factors in 2002 which may hinder consumer
growth include:

	* Appreciation of ruble/increased competition from imports.

	* Bad Performand of the Export Sector

        * Slowdown in growth of major indicators that boosted economic
	  recovery during 2000-2001 such as investments, personal
	  incomes and salaries, etc.

	* Reduced rate in the growth of the money supply

                                       (p. 8)

Frankly, most projections are slightly optimistic (including the
documents pointed to by googly-ga below) so you have to choose WHICH
stats to cite to highlight a pessimistic conclusion, but they are
there. By optimistic, it seems that things 'not being as bad as we
thought the would be' means 'optimistic' in Russian economic analysis!
Subject: Re: economic growth in Russia in 2002
From: googly-ga on 17 Jun 2002 00:27 PDT
These links below give you the latest perspectives on the Russian Economy.

( )

( )

The slowdown in consumer growth is expected to arise on account of high inflation.


googly ga

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