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. Last Updated: 07/27/2016

Premier: Economy Set to Grow

Russia's economic performance in August shows it is poised for growth, Prime Minister Viktor Chernomyrdin said Monday.


"Russia objectively stands on the threshold of economic growth," he told a banking conference. "In August, the consumer price index practically did not change and the fall of GDP [gross domestic product] halted."


Chernomyrdin said the economy had already begun to grow in the first half, apparently quoting Russian industrial output figures up 2 percent year-on-year in the first half and 3.4 percent for the year ending in July.


The broader economy as measured by GDP was unchanged for the years ending in June and July.


Chernomyrdin and President Boris Yeltsin have often said Russia was on the brink of an economic recovery, and the 1997 budget also forecast 2 percent GDP growth for the year.


Three months of flat growth would be a positive step in that direction, though, since the economy was ready to turn around.


Chernomyrdin praised the government's strong monetary policy and said interest rates would be pulled even lower next year. Rates are currently below 19 percent and are expected to be 12 to 14 percent in 1998.


But Central Bank Chairman Sergei Dubinin indicated the government's forecast for next year -- the budget predicts 2 percent GDP growth and 5 percent inflation -- had some leeway.


"We are sure that next year we will achieve single-digit inflation," Dubinin said. "We are calculating that inflation will be 5 to 8 percent in 1998."


Chernomyrdin said foreign investment had brought down yields on government debt and helped the central bank conduct a strong monetary policy by building its foreign reserves, while predicting annual foreign investment for Russia at between $10 billion and $15 billion between now and the end of the century. ()