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Commenting on economic progress over the past six months, Deputy
Finance Minister Alexei Ulyukaev told the nation that economic
growth for 2001 may be higher than expected. He believes that
the revival in the domestic economy by April was so great that
additional budget revenues by the end of the year "may exceed
the planned sum by 100 billion rubles", and that "inflation
could drop to zero in August and September". Paradoxically,
some politicians may take such successful economic development
as a personal offence.
Analysts from Yegor Gaidar's Transition Economy Institute did
not miss the opportunity to spoil the minister's apparently triumphant
report. In June, analysts studied the situation at about 1,000
Russian enterprises and failed to detect any major economic progress.
According to their report, the expected improvement in Russian
industry compared to May 2001 did not happen. Furthermore, the
economic situation has deteriorated slightly. Growth in consumer
demand has halted; therefore enterprises are accumulating stock
that they can't sell.
Although industrial output did rise slightly in June, after remaining
virtually unchanged in May, the increase was really insignificant.
Decline continued in the electricity and forestry sector, and
emerged in the chemical, petrochemical, and ferrous metals sectors.
Wholesale price growth has slowed for five months in a row. Sales
problems have led 20% of industrial enterprises to curb price
growth. This trend is especially perceptible in ferrous metals
(53%), forestry (39%), and light industry (30%).
However, it is not all bad news. The forecasts for changes in
consumer demand have been stable for four months running. Russian
enterprises are still hoping for a big jump in cash sales. The
brightest outlook is observed in metals, machine-building, and
light industry. The absolute record for optimism - seasonal, apparently
– is held by construction enterprises.
Yevgeny Gavrilenkov, head of the Economic Analysis Bureau, views
the situation even more favorably. In his opinion, the results
for a single month do not provide any grounds for drawing pessimistic
conclusions. The June drop in business activity is seasonal –
and therefore natural. Most importantly, investment has started
to rise over the past month, rising by 4% in some sectors of industry.
Last year, fuel and energy sector accounted for most investments;
but this year the range of investment has considerably expanded
into processing. Both demand and real incomes continue to grow.
So Gavrilenkov believes that there are substantial reasons for
revising the budget indicators upward.
Of course, anyone would be happy to earn more than expected.
But smouldering discontent is growing among Russian politicians.
Some Duma deputies are especially sensitive about unexpectedly
high economic growth. Last year's squabbles in the Duma, when
members of various factions did their best to get their hands
on extra budget revenues, are still remembered in parliament.
This time, the "budget battle" scheduled for September
could be much worse: the Communists have adopted recently a very
strong anti-government stand. Even before the reports about possible
extra revenues, many senior Communists said they would move another
vote of no-confidence in the Cabinet this autumn, and even raise
the issue of disbanding the Duma. Now that a major proportion
of the extra 100 billion roubles is likely to end up in the jurisdiction
of the despised "capitalist ministers", the Communists
could really cut loose.
The position of Yabloko is also worth noting. Last Monday, Grigory
Yavlinsky strongly criticized the Cabinet's policies; according
to the Yabloko leader, "the state is reneging on its social
responsibilities to its citizens". Yabloko views the Cabinet's
economic programme as a transition to "the so-called ancillary
state which guarantees welfare only for the most vulnerable social
strata".
Yabloko predicts a repeat of the early 1990s radical right-wing
reforms. To all intents and appearances, the Yabloko democrats
will get no less worked up than the Communists over the question
of distributing such a large sum of extra budget revenues. Therefore,
it is safe to say that economic growth in Russia is unlikely to
improve the political climate. It would appear that politicians
find it extremely difficult to work in normal conditions.
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