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Russia Economy

    Economy—overview: Seven years after the collapse of the USSR, Russia is still struggling to establish a modern market economy and achieve strong economic growth. Russian GDP has contracted an estimated 43% since 1991, including a 5% drop in 1998, despite the country's wealth of natural resources, its well-educated population, and its diverse—although increasingly dilapidated—industrial base. By the end of 1997, Russia had achieved some progress. Inflation had been brought under control, the ruble was stabilized, and an ambitious privatization program had transferred thousands of enterprises to private ownership. Some important market-oriented laws were also passed, including a commercial code governing business relations and an arbitration court for resolving economic disputes. But in 1998, the Asian financial crisis swept through the country, contributing to a sharp decline in russia's earnings from oil exports and resulting in an exodus of foreign investors. Matters came to a head in August 1998 when the government allowed the ruble to fall precipitously and stopped payment on $40 billion in ruble bonds. Ongoing problems include an undeveloped legal and financial system, poor progress on restructuring the military-industrial complex, and persistently large budget deficits, largely reflecting the inability of successive governments to collect sufficient taxes. Russia's transition to a market economy has also been slowed by the growing prevalence of payment arrears and barter and by widespread corruption. The severity of Russia's economic problems is dramatized by the large annual decline in population, estimated by some observers at 800,000 people, caused by environmental hazards, the decline in health care, and the unwillingness of people to have children.

    GDP: purchasing power parity—$593.4 billion (1998 est.)

    GDP—real growth rate: -5% (1998 est.)

    GDP—per capita: purchasing power parity—$4,000 (1998 est.)

    GDP—composition by sector:
    agriculture: 7%
    industry: 39%
    services: 54% (1997)

    Population below poverty line: 28.6% (1998 est.)

    Household income or consumption by percentage share:
    lowest 10%: 3%
    highest 10%: 22.2% (1993)

    Inflation rate (consumer prices): 84% (1998 est.)

    Labor force: 66 million (1997)

    Labor force—by occupation: NA

    Unemployment rate: 11.5% (1998 est.) with considerable additional underemployment

    Budget:
    revenues: $40 billion
    expenditures: $63 billion, including capital expenditures of $NA (1998 est.)

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

    Industrial production growth rate: -5.5% (1998 est.)

    Electricity—production: 834 billion kWh (1997)

    Electricity—production by source:
    fossil fuel: 68.14%
    hydro: 19%
    nuclear: 12.82%
    other: 0.04% (1997)

    Electricity—consumption: 788.036 billion kWh (1996)

    Electricity—exports: 24.2 billion kWh (1996)

    Electricity—imports: 6.6 billion kWh (1996)

    Agriculture—products: grain, sugar beets, sunflower seed, vegetables, fruits; beef, milk

    Exports: $71.8 billion (1998 est.)

    Exports—commodities: petroleum and petroleum products, natural gas, wood and wood products, metals, chemicals, and a wide variety of civilian and military manufactures

    Exports—partners: Ukraine, Germany, US, Belarus, other Western and less developed countries

    Imports: $58.5 billion (1998 est.)

    Imports—commodities: machinery and equipment, consumer goods, medicines, meat, grain, sugar, semifinished metal products

    Imports—partners: Europe, North America, Japan, and less developed countries

    Debt—external: $164 billion (yearend 1998)

    Economic aid—recipient: $8.523 billion (1995)

    Currency: 1 ruble (R) = 100 kopeks

    Exchange rates: rubles per US$1—22.2876 (January 1999), 9.7051 (1998), 5,785 (1997), 5,121 (1996), 4,559 (1995), 2,191 (1994)
    note: the post-1 January 1998 ruble is equal to 1,000 of the pre-1 January 1998 rubles

    Fiscal year: calendar year

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