Economy - overview Russia, a vast country with a wealth of natural resources, a well-educated population, and a diverse, but declining, industrial base, continues to experience formidable difficulties in moving from its old centrally planned economy to a modern market economy. After seven consecutive years of contraction 1990-96 in which GDP fell by one-third, GDP grew by 0.4% in 1997, according to official statistics. Moscow continued to make strides in its battle against inflation, which fell to 11%, half the 1996 rate. The central government made good on most back wages owed public-sector employees - including the military - although the stock of wage arrears to employees of private enterprises remained large. Privatization revenues increased significantly, largely on the strength of a few high-profile tenders, such as that of telecommunications giant Svyazinvest. On the downside, Moscow continued to struggle with a severe fiscal imbalance. Lagging tax collections led the government to adopt a revised budget in spring 1997 that cut spending by about 20% despite protests from the legislature. Russia's traditional trade surplus continued to contract - largely because of soft international commodity prices - and Moscow's WTrO accession made only halting progress. Although President YEL'TSIN brought in a new economic team early in 1997, key structural reform initiatives continue to move slowly. A revised tax code remains stuck in the Duma, while little progress is being made on agricultural land reform. Small business development has lagged. Prospects for a return to robust growth have been set back by the spillover from Asia's financial turmoil, which hit Russia hard during the last quarter of 1997. Moscow at first tried to both support the ruble and keep interest rates down, but this policy proved unsustainable, and in early December 1997 the Central Bank let interest rates rise sharply. As the year ended, Russian authorities were attempting to put the best face on the financial situation, while at the same time scaling back their previous optimistic growth projections for 1998 to 1%-2%. Because of Russia's severe macroeconomic constraints, resources allocated to the military sector have declined sharply since the implosion of the USSR in December 1991.

GDP purchasing power parity - $692 billion (1997 est.)

GDP - real growth rate 0.4% (1997 est.)

GDP - per capita purchasing power parity - $4,700 (1997 est.)

GDP - composition by sector
agriculture: 7%
industry: 39%
services: 54% (1996)

Inflation rate - consumer price index 11% (1997 est.)

Labor force
total: 66 million (1997)
by occupation: NA

Unemployment rate 9% (1997 est.) with considerable additional underemployment

Budget
revenues: $59 billion
expenditures: $70 billion, including capital expenditures of $NA (1997 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 1.9% (1997 est.)

Electricity - capacity 214.687 million kW (1995)

Electricity - production 834 billion kWh (1997)

Electricity - consumption per capita 5,508 kWh (1995)

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

Exports
total value: $86.7 billion (1997)
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: $66.9 billion (1997)
commodities: machinery and equipment, consumer goods, medicines, meat, grain, sugar, semifinished metal products
partners: Europe, North America, Japan, Third World countries

Debt - external $135 billion (yearend 1996)

Economic aid
recipient: ODA, $15 billion drawn (1990-97)
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 - 5,941 (December 1997), 5,785 (1997), 5,121 (1996), 4,559 (1995), 2,191 (1994), 992 (1993)

Fiscal year calendar year

NOTE: The information regarding Russia on this page is re-published from the 1998 World Fact Book of the United States Central Intelligence Agency. No claims are made regarding the accuracy of Russia Economy 1998 information contained here. All suggestions for corrections of any errors about Russia Economy 1998 should be addressed to the CIA.