#12
Vedomosti
March 21, 2002
Better Seen from a Distance
The IMF predicts that Russia will flourish
By Alexander Bekker, Vladimir Fedorin
(therussianissues.com)

IMF First Deputy Managing Director Anne Krueger has brought good news to Moscow: the International Monetary Fund expects the Russian economy to demonstrate an increased economic growth in 2003. Analysts trust the IMF more than Presidential Adviser Andrei Illarionov, who had hastened to say that the Russian economy was sliding into depression.

According to Alexei Mozhin, who represents Russia at the IMF as its executive director, a report presented to the IMF board of directors in early March showed a more favorable picture of the Russian economy than at any time during the ten years of Russia's IMF membership. Addressing a conference at a research institute led by Yegor Gaidar yesterday, Krueger quoted an IMF forecast as saying Russia's GDP would grow 3.5% this year, with 4% expected in 2003.

Mozhin maintains that America and Europe are overcoming recession, a factor that will have an increasingly favorable effect on the price situation. Accordingly, as Russia's is an economy based on raw materials, it will get a new stimulus for growth.

The IMF's forecast is more optimistic than that of Russia's Ministry for Economic Development and Trade. Experts there say that, according to the optimistic scenario, the GDP should grow 3.8% in 2002, and, according to the pessimistic scenario, it should amount to 3.2%.

Yevgeny Yasin, former economics minister and now vice president of the Higher School for Economics, shares the more cautious view of official Russian financiers. "We'll be able to diagnose the state of the economy after March to see whether there is a deep slump or not." He says he does not see any grounds for pessimism if the mood of entrepreneurs and consumers is anything to go by. However, he believes 3-3.5% are more realistic figures than 4%.

Other analysts share this view. Twenty-five analysts polled in February by the Development Center agreed that the GDP might grow by an average of 3.5% in 2002 and 2003. Thirteen "optimists" felt economic performance in 2003 would be somewhat better than in 2002, but twelve "pessimists" said the opposite would be the case. The "optimists" forecast a 4.1% increase in economic growth in 2003. The "pessimists" said it would amount to 3%.

Illarionov expressed the views of the "pessimists" in a nutshell yesterday. He said he was disappointed with the government's decision to leave the restrictions on Russia's oil export in force and declared Russia was entering a period of depression marked by "a periodic economic growth of 0-2% a year." He drew a parallel with Japan, which, he said, had not been able to extricate itself from depression for ten years.

In late January of this year, Alexei Vorobyov of the Aton company published a forecast for Russia's GDP for the next two years, which coincided with IMF figures. However, now he believes it may grow by 4% this year. He thinks the world economy will rebound sooner than expected, and this factor will jack up oil prices. "The external factor will determine growth rates in Russia in the next two or three years," he maintains.

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