<hdr>The World Factbook 1994: Russia<nl>Economy</hdr><body>
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<item><hi format=bold>Overview:</hi> Russia, a vast country with a wealth of natural resources, a well-educated population, and a diverse industrial base, continues to experience severe difficulties in moving from its old centrally planned economy to a modern market economy. President YEL'TSIN's government has made some progress toward a market economy by freeing most prices, slashing defense spending, unifying foreign exchange rates, and launching an ambitious privatization program. Yet much of the old order persists and YEL'TSIN faces formidable opposition to further measures such as the reduction of subsidies to old-line industries. Output continues to fall although the mix is gradually becoming more responsive to Russia's needs. According to Russian official data, GDP declined by 12% in 1993 compared with 19% in 1992. Industrial output in 1993 fell 16% with all major sectors taking a hit. Agricultural production, meanwhile, was down 6%. The grain harvest totalled 99 million tons—some 8 million tons less than in 1992. Unemployment climbed in 1993 but remained low by Western standards. The official number of unemployed rose from 578,000 at the beginning of 1993 to about 1 million—or roughly 1.4% of the work force—by yearend. According to the Russian labor minister, the actual number of unemployed probably was closer to 4 million. Government fears of large-scale unemployment continued to hamper industrial restructuring efforts. According to official statistics, average real wages remained flat. Nonetheless, a substantial portion of the population, particularly the elderly and people in remote areas, finds its well-being steadily shrinking. The disparity in incomes between the rich and poor continued to rise in 1993, primarily reflecting the high earnings of enterprise managers and persons employed in the emerging private sector. The government tried to narrow the income gap by raising the wages of budget-funded workers—mainly teachers and health care specialists. Official data may overstate hardships, because many Russians supplement their income by moonlighting or by bartering goods and services, activities that often go unreported. Russia made good progress on privatization in 1993 despite active opposition from key cabinet members, hard-line legislators, and antireform regional leaders. By yearend, for example, roughly 35% of Russia's medium and large state enterprises had been auctioned, while the number of private farms in Russia increased by 86,000, reaching a total of 170,000. As a result, about 6% of agricultural land now has been privatized. Financial stabilization continued to remain a challenge for the government. Moscow tightened financial policies in early 1993—including postponing planned budget spending—and succeeded in reducing monthly inflation from 27% in January to 20% in May and June. In the summer, however, the government relaxed austerity measures in the face of mounting pressure from industry and agriculture, sparking a new round of inflation; the monthly inflation rate jumped to 25% in August. In response, Moscow announced a package of measures designed to curb government spending and inflation. It included eliminating bread subsidies, delaying payment obligations, raising interest rates, and phasing out concessionary Central Bank credits to enterprises and regions. The measures met with some success; the monthly inflation rate declined to 13% in December. According to official statistics, Russia's 1993 trade with nations outside the former Soviet Union produced a $16 billion surplus, up from $6 billion in 1992. Moscow arrested the steep drop in exports that it had been suffering as a result of ruptured ties with former trading partners, output declines, and erratic efforts to move to world prices. Foreign sales—comprised largely of oil, natural gas, and other raw materials—grew slightly. Imports were down by 15% or so as a result of new import taxes and Moscow's reluctance to increase its debt burden by purchasing grain and other goods with foreign credits. Russian trade with other former Soviet republics continued to decline and yielded a surplus of some $5 billion. At the same time, Russia paid only a fraction of the roughly $20 billion in debt coming due in 1993, and by mid-year, Russia's foreign debt had amounted to $81.5 billion. While Moscow reached agreement to restructure debts with Paris Club official creditors in April 1993, Moscow's refusal to waive its right to sovereign immunity kept Russia and its bank creditors from agreeing to restructure Moscow's commercial loans. Capital flight continued to be a serious problem in 1993, with billions of dollars in assets owned by Russians being parked abroad at yearend. Russia's capital stock continues to deteriorate because of insufficient maintenance and new construction. The capital stock on average is twice the age of capital stock in the West. Many years will pass before Russia can take full advantage of its natural resources and its human assets.
<item><hi format=bold>National product:</hi> GDP—purchasing power equivalent—$775.4 billion (1993 estimate from the UN International Comparison Program, as extended to 1991 and published in the World Bank's World Development Report 1993; and as extrapolated to 1993 using official Russian statistics, which are very uncertain because of major economic changes since 1990)
<item><hi format=bold>National product real growth rate:</hi> -12% (1993 est.)
<item><hi format=bold>National product per capita:</hi> $5,190 (1993 est.)
<item><hi format=bold>Inflation rate (consumer prices):</hi> 21% per month (average 1993); 13% per month (December 1993)
<item><hi format=bold>Unemployment rate:</hi> 1.4% (1 January 1994; official data)
<item><hi format=bold>Budget:</hi>
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<item>• <hi format=ital>revenues:</hi> $NA
<item>• <hi format=ital>expenditures:</hi> $NA, including capital expenditures of $NA
<item>• <hi format=ital>commodities:</hi> petroleum and petroleum products, natural gas, wood and wood products, metals, chemicals, and a wide variety of civilian and military manufactures
<item>• <hi format=ital>partners:</hi> Europe, North America, Japan, Third World countries, Cuba
<item>• <hi format=ital>consumption per capita:</hi> 6,782 kWh (1 January 1992)
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<item><hi format=bold>Industries:</hi> complete range of mining and extractive industries producing coal, oil, gas, chemicals, and metals; all forms of machine building from rolling mills to high-performance aircraft and space vehicles; ship- building; road and rail transportation equipment; communications equipment; agricultural machinery, tractors, and construction equipment; electric power generating and transmitting equipment; medical and scientific instruments; consumer durables
<item><hi format=bold>Agriculture:</hi> grain, sugar beet, sunflower seeds, meat, milk, vegetables, fruits; because of its northern location does not grow citrus, cotton, tea, and other warm climate products
<item><hi format=bold>Illicit drugs:</hi> illicit cultivator of cannabis and opium poppy; mostly for domestic consumption; government has active eradication program; used as transshipment point for Asian and Latin American illicit drugs to Western Europe and Latin America
<item><hi format=bold>Economic aid:</hi>
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<item>• <hi format=ital>recipient:</hi> US commitments, including Ex-Im (1990-93), $13 billion; other countries, ODA and OOF bilateral commitments (1988-93), $115 billion
<item><hi format=bold>Exchange rates:</hi> rubles per US$1—1,247 (27 December 1993), 415 (24 December 1992); nominal exchange rate still deteriorating but real exchange rate strengthening
<item><hi format=bold>Fiscal year:</hi> calendar year
