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. Last Updated: 07/27/2016

Bleak Economic Figures Released by Government




As the Russian government continues to drag its feet on adopting an anti-crisis economic plan, statistics reflect a dismal economic performance and economists paint a grim picture for the rest of the year.


Prime Minister Yevgeny Primakov said in a television address to the nation Tuesday that his Cabinet was working on an anti-crisis program, but its "financial side" would depend on the outcome of talks with international lenders, which have so far refused to come up with more money for Russia.


Meanwhile, the State Statistics Committee said Tuesday that inflation during August and September was 43.5 percent, and that consumer prices had risen 49.6 percent since the beginning of the year.


August will most likely see an 8.2 percent drop in Russia's gross domestic product and an 11.5 percent fall in industrial production, Deputy Economic Minister Nikolai Shamrayev said Tuesday. According to Shamrayev, annual inflation could hit 230 percent by the end of the year unless the government can obtain funding from the International Monetary Fund and the World Bank.


But experts at the Russian-European Center for Economic Policy said at a news conference Tuesday that, with or without foreign aid, Russia was doomed to inflation possibly as high as 400 percent for all of 1998.


Even the full second tranche from the IMF f which comes to 67 billion rubles at Tuesday's exchange rate f would fall short of the deficit of 98 billion rubles included in the government's draft emergency budget for the fourth quarter of the year, said Vladimir Kosmarsky, managing director of RECEP.


"It seems to me that hyperinflation awaits us," Kosmarsky said. "Considering our entire national industry ? and the situation with the population's incomes, hyperinflation is a very serious thing. I cannot predict the possible social consequences of this process."


RECEP also reported that GDP for the first nine months of this year was just 80 percent of the 1995 level, and that real personal income had sunk to 1992 levels.


Economists base their inflation predictions on their conviction that Russia has already started adding rubles to its money supply. According to RECEP, in September the Central Bank injected 12.5 billion new rubles into the economy, though it is unclear where. Economists suspect the money went toward facilitating payments, providing liquidity to state-controlled Sberbank, and covering some government spending.