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Russia's economy grew by 7 percent |
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August 1, 2000
MOSCOW (AP) - Russia's economy grew by 7 percent over the first half of this year, a top Cabinet member said Monday, playing down fears that the economic growth is tapering off. Vice Premier Viktor Khristenko announced the latest economic indicators after a weekly Cabinet session Monday headed by President Vladimir Putin, who is riding high after a string of political victories last week. Next year's budget topped the meeting's agenda. Khristenko said inflation for July would not exceed 1 percent, and that the yearly inflation rate would be 18-20 percent - instead of the 35 percent that experts predicted after prices surged by 2.6 percent in June. Not all Cabinet members were so optimistic Monday. Russia's economy has enjoyed a boost over the past year, after the 1998 financial collapse and a decade of almost constant decline. Rising oil prices helped, since Russia is a major oil exporter. A lower ruble, meanwhile, has aided domestic producers by making imports more expensive. But the ruble has been climbing against the dollar recently, and analysts warn that oil prices are due to fall. Economics and Trade Minister German Gref said in an interview published Monday that growth in 2001 would be lower than this year. "The economic dynamics of recent months are forcing us to clarify the parameters of annual inflation, GDP growth, the ruble rate" for the 2001 budget, he told the newspaper Vedomosti. Monday's Cabinet meeting also discussed this year's harvest, Khristenko said, according to the Interfax news agency. No details were immediately available. Russia's harvest has been dismal for the past two years and prompted food aid from the West. This year's harvest is projected to be better, but still well below average. Monday's budget discussion came after the upper house of parliament passed a new tax code last week that Putin says is necessary to improve the economy. He says the code, which includes replacing the progressive income tax with a flat 13-percent tax, will reduce rampant tax evasion and spur investment. The passage of the code was seen as a victory for Putin, who is trying to rein in the often authoritarian regional bosses who make up the upper house of parliament, the Federation Council. In another Putin success last week, the chamber reluctantly voted itself out of a job, approving the president's proposal to dissolve and restructure the upper house. The changes are scheduled to take effect in 2002. |