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. Last Updated: 07/27/2016

Inflation Edges Up, Output Stagnant

Official figures released Friday painted a mixed picture of Russia's economy in July, with output stagnating for the second month running, inflation edging up for the first time in two years, but unemployment and wage arrears both falling.


The State Statistics Committee said gross domestic product, the broadest measure of an economy's output, had risen 4.2 percent in July after 3.6 percent in June, but was unchanged from a year earlier in both months.


In the first seven months of this year, GDP was 0.2 percent lower than a year earlier.


Ministers had originally hoped that 1997 would be the first year of recovery in Russia since the economy started declining in 1990 but now say that output will be at best flat this year.


The recovery is now billed for 1998.


President Boris Yeltsin's deputy chief of staff, Alexander Livshits, said Friday the 1998 budget currently being drafted by the government assumes 2 percent GDP growth next year.


Inflation next year is forecast at 5 to 7 percent, said Livshits, a former finance minister, adding: "The figures are realistic enough."


But year-on-year inflation accelerated to 14.7 percent in July from June's record low 14.5 percent, the first increase in the year-on-year rate since June 1995.


Prices have now risen 9.6 percent so far this year, prompting First Deputy Prime Minister Anatoly Chubais to acknowledge last week that inflation over the whole year would be above the 11.8 percent target.


The overall trade surplus widened to $11.8 billion in the first half of the year from $10.8 billion a year earlier but the volume of exports and imports both shrank, another indicator of stagnation.


The government, however, could also draw some comfort from the figures.


The number of people officially estimated as unemployed fell for the third successive month in July to 6.69 million or 9.3 percent of the work force.


The amount of wage arrears due to a lack of funding from the federal or regional governments fell to 10.94 trillion rubles ($2 billion) Aug. 1 from 11.35 trillion on July 1. Total unpaid wages also fell.


The government has made a priority of eliminating wage and pension arrears, part of a web of unpaid bills choking the economy, and is using privatization proceeds and taxes squeezed out of unwilling corporations to pay off the debts.