Russian Economic Report, November 2005
Growth in Russia received a boost from new increases in oil and gas prices, and from the rapid expansion of domestic demand. Income and wage growth continues to outstrip the expansion of GDP, and the retail trade boom shows no signs of abating. But...
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| Language: | English |
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World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/en/319551468092107836/Russian-economic-report http://hdl.handle.net/10986/36157 |
| Summary: | Growth in Russia received a boost from
new increases in oil and gas prices, and from the rapid
expansion of domestic demand. Income and wage growth
continues to outstrip the expansion of GDP, and the retail
trade boom shows no signs of abating. But the slowdown in
many sectors of the economy since the second half of 2004
remains visible, and 2005 has brought even stronger evidence
that this slowdown is related to increasing competitive
pressures from the rapid real appreciation of the ruble.
Much of the recent growth in Russia appears to be
concentrated in non-tradable sectors. Record high record
high oil prices once again widened considerably
Russia's trade, current account, and balance of
payments surpluses. Higher inflation in 2005 than in 2004 is
due in large part to increases in administered utilities
prices early in the year. The primary source of inflationary
pressures in Russia remains the huge balance of payments
surplus. As oil prices grow, so do the potential pressures
for inflation or nominal currency appreciation. The
Stabilization Fund continues to be far and away the most
important economic policy instrument for limiting these
pressures. Monetary policy in Russia continues to revolve
around managing the nominal exchange rate. The Central Bank
has announced its intention to introduce gradually more
exchange rate flexibility over the medium term.
Exceptionally high world oil prices once again brought
higher than expected revenues to the federal government in
2005, generating a budgetary surplus of an estimated 1.17
billion rubles (cash basis), or 8.9 percent of GDP, in the
first eight months of the year. Aggregate social indicators
continue to show signs of progress. Growth in real wages may
have slowed from the double digit annual expansion of the
previous five years but wages are still growing faster than
the economy as a whole. Real disposable income of the
population also increased by an estimated 9.3 percent in the
first nine months of 2005 relative to the same period of
2004 and the rate of unemployment in the Russian economy is
still declining . |
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