Economy - overview Russia, a vast country with a wealth of natural resources, a well-educatedpopulation, and a diverse, but declining, industrial base, continues to experienceformidable difficulties in moving from its old centrally planned economy toa modern market economy. Most of 1996 was a lost year for economic reforms,with government officials focused in the first half of the year on PresidentYEL'TSIN's reelection and then on his medical problems. The only major successwas in the fight against inflation, which fell from 131% in 1995 to 22% in1996. Russia failed to make any progress in restructuring its social welfareprograms to target the most needy - among whom are many of the old pensioners- or to pass needed tax reform. While approximately 75% of industry has nowbeen privatized, the agricultural sector has undergone little reform sincethe break-up of the Soviet Union. Stockholder rights remain weak while crimeand corruption are rampant in much of the economy. Many enterprises continueto operate without hard budget constraints, resulting in barter trade andincreased inter-enterprise debts. According to official statistics, the Russian economy declined for the fifth straight year since the beginning of reforms,with GDP in 1996 falling by 6% and industrial output by 5%. The true sizeof the Russian economy remains controversial, however, with estimates of unreportedeconomic activity ranging from 20%-50% of GDP. Indeed, according to Russianstatistics, the Russian consumer has seen a small improvement in the lastseveral years, with real average incomes growing by about 8% from early 1993to late 1996. The share of the Russian population living below the povertyline is said to have dropped from one-third in early 1993 to one-fifth inlate 1996. Few Russians lack basic necessities, and ownership of consumergoods such as VCRs and automobiles has increased markedly. The growth of wageand pension arrears slowed in the second half of 1996, and the governmentpledged to clear all budget-funded wage and pension arrears by the end of1997. The government continued to be plagued with tax collection problemsduring 1996, forcing it to cut its planned spending by 18%. A crackdown onmajor tax debtors at the end of the year had only limited success. Spendingby all levels of government remains high, between 40%-45% of GDP. The economyis continuing its integration into world markets. Russia's trade surplus,after adjustment for unreported "shuttle" trade, grew to a record $28.5 billion in 1996, according to official Russian statistics. Export growth, which slowedfrom 18% to 9%, was due mostly to increased raw material prices. After increasingby 15% in 1995, imports dipped by 2% in 1996 as Russian demand for Westernconsumer goods slackened. Russia is continuing to make progress in its WTrOnegotiations; the government has made quick accession one of its major policygoals. The continued unsettled economic and political situation has discouragedforeign investment, which totaled only $6.5 billion in 1996, including $2.1billion in direct investment; furthermore, capital flight continues to exceedin volume the inflow of foreign capital. The central bank estimates that $30billion in US currency circulates in the Russian economy. In March 1997, YEL'TSINsignaled his intention to restart stalled economic reforms by reorganizingthe cabinet, bringing in a new team of ministers with strong reform credentials.

GDP purchasing power parity - $767 billion (1996 estimate as extrapolatedfrom World Bank estimate for 1994)

GDP - real growth rate -6% (1996 est.)

GDP - per capita purchasing power parity - $5,200 (1996 est.)

GDP - composition by sector
agriculture: NA%
industry: NA%
services: NA%

Inflation rate - consumer price index 22% (1996)

Labor force
total: 73 million (1996)
by occupation : NA

Unemployment rate 9.3% (December 1996) (according to ILO definition) with considerableadditional underemployment

Budget
revenues : $NA
expenditures: $NA, including capital expenditures of $NA

Industries complete range of mining and extractive industries producing coal, oil,gas, chemicals, and metals; all forms of machine building from rolling millsto high-performance aircraft and space vehicles; shipbuilding; road and railtransportation equipment; communications equipment; agricultural machinery,tractors, and construction equipment; electric power generating and transmittingequipment; medical and scientific instruments; consumer durables, textiles,foodstuffs, handicrafts

Industrial production growth rate -5% (1996)

Electricity - capacity 214.69 million kW (1994)

Electricity - production 833.16 billion kWh (1994)

Electricity - consumption per capita 5,114 kWh (1995 est.)

Agriculture - products grain, sugar beets, sunflower seed, vegetables, fruits (because of itsnorthern location does not grow citrus, cotton, tea, and other warm climateproducts); meat, milk

Exports
total value: $88.3 billion (1996)
commodities : petroleum and petroleum products, natural gas, wood and wood products,metals, chemicals, and a wide variety of civilian and military manufactures
partners: Europe, North America, Japan, Third World countries

Imports
total value: $59.8 billion (1996)
commodities : machinery and equipment, consumer goods, medicines, meat, grain, sugar,semifinished metal products
partners: Europe, North America, Japan, Third World countries

Debt - external $130 billion (yearend 1996)

Economic aid
recipient: ODA, $13 billion (1990-96)
note : US commitments, including Ex-Im, $15 billion (1990-96); other countries,ODA and OOF bilateral commitments (1990-96), $125 billion

Currency 1 ruble (R) = 100 kopeks

Exchange rates rubles per US$1 - 5,727 (March 1997), 5,121 (1996), 4,559 (1995), 2,191(1994),

Current issues following the outbreak of genocidal strife in Rwanda in April 1994 betweenTutsi and Hutu factions, more than 2 million refugees fled to neighboringBurundi, Tanzania, Uganda and Democratic Republic of the Congo, formerly Zaire;according to the UN High Commission on Refugees, in 1996 and early 1997 nearly1,300,000 Hutus returned to Rwanda; of these, 720,000 returned from Zaire,480,000 from Tanzania, 88,000 from Burundi, and 10,000 from Uganda

NOTE: The information regarding Russia on this page is re-published from the 1997 World Fact Book of the United States Central Intelligence Agency. No claims are made regarding the accuracy of Russia Economy 1997 information contained here. All suggestions for corrections of any errors about Russia Economy 1997 should be addressed to the CIA.