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. Last Updated: 07/27/2016

Statistics Committee Overhauls Calculations

The State Statistics Committee this week changed the methodology it uses to measure economic performance — a move that bumped industrial output growth between January and May from 5.3 percent to 7.8 percent, at least on paper.

The jump in growth occurred after the committee, with the consent of the Economic Development and Trade Ministry and the Industry, Science and Technology Ministry, "transferred its calculations to a new base year" — 1999 rather than 1995. In other words, statistics officials are simply juggling numbers in a new way.

In general, the industrial production statistic is determined by the committee based on the production of 605 important goods, measured not by ruble price, but in terms of real value. The Industry, Science and Technology Ministry said that after the crisis of 1998 the relative importance of certain goods for the Russian economy changed, and the structure of gross added value in various sectors is quite different than the base calculation values for 1995. Thus it was decided to take the 1999 structure as a basis.

"[Since 1995,] the power sector's share slipped, while the oil sector's most likely increased," said Alexander Frenkel, an expert at the Russian Academy of Sciences' economics institute.

Even so, certain experts are perplexed as to why the change in methodology has resulted in such a serious change in growth on paper.

"We have made a finite amount of 'widgets'; assessments of the dynamics of the physical volume [of production] should stay the same," said an expert from the Unikon auditing company.

Independent research institutes that make their own calculations are inclined to dispute the results of the State Statistics Committee.

"According to our data, the total growth in industrial production this year in Russia is at 4 percent," said Seya Laimel, a specialist with the Russian and European Center for Economic Policy.

Despite the disparities, Prime Minister Mikhail Kasyanov, Finance Minister Alexei Kudrin and presidential economic adviser Andrei Illarionov have already received the committee's new figures, which may require amendments to be made to the 2002 budget.

"The relationship between profit and salaries in the GDP might change. For this reason, the tax structure will undergo changes," said Deputy Economic Development and Trade Minister Arkady Dvorkovich. The changes will effect no more than 5 percent of gross domestic product, he said.

As before, in individual sectors the production of "widgets" is taken into account and the results of "social competition" are quite realistic. The microbiological industry leads all sectors with a production growth from the start of the year of 68.7 percent, followed by the printing industry at 19.3 percent and the glass, china and pottery industry at 14.5 percent.

"It is comforting that microbiology came out in first place," said Alexander Nekipelov, director of the Institute of International Political and Economic Research with the Russian Academy of Sciences. "It means we have potential in the high-tech sectors," he said.