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Is Russia One Of The Richest Countries

A treasure trove of minerals and energy, surrounded by the biggest marketplaces on Earth.
by Oleg Mityayev
RIA Novosti economic commentator
Moscow (RIA Novosti) Jul 26, 2007
The United States, Japan, China, Germany...Russia? Strange as it may seem, the world's largest country might soon also be one of its five biggest economies. On Tuesday, Russia's Economic Development and Trade Ministry submitted a remarkable document to the government - a plan for Russian social and economic development until the year 2020. With ambitious targets, it attracted the attention of experts even before its official publication.

According to the forecast, if the country shifts its economic orientation from raw materials to innovation, its gross domestic product will grow by an average of 6.7% a year, putting the Russian economy into the world's top five. At that rate, the country's economy will grow two-and-a-half times by 2020, giving it an annual per capita GDP of $30,000 - no less than Western Europe and North America.

Some experts smirk at the forecast for its starry-eyed idealism-but Russia's present-day and recent economic growth rates back it up. GDP has been adding almost 7% annually for the last eight years, exceeding the most optimistic projections of government experts and other analysts. The Economic Development and Trade Ministry has forecast a 6.5% growth rate for this year. It will certainly be greater than that-the Kremlin and the Cabinet expect 7-8%.

Russia's industrial development is on a par with the Asian Tigers'. Manufacturing and engineering picked up just as mining slowed down. The Federal State Statistics Service, or Rosstat, reported a 7.7% increase in industrial output in the first half of the year. The rate for manufacturing and engineering was 12.2%. The figures for June were even more impressive: 10.9% and 15.6%, respectively.

So a majority of economists are not skeptical about the country's development strategy. According to experts at the Institute of National Economic Forecasting, affiliated with the Russian Academy of Sciences, pessimistic forecasts are based on an inertial model of development, which is outdated now that 15 years of reforms has given Russia a full-fledged market economy. Now, the targets will be hit. "It's hard to give advice to the government in the current situation. They're saying all the right things. They must act accordingly. That's what matters most," says Viktor Ivanter, the Institute's director.

Academic economists are even more optimistic in their forecasts. They expect GDP growth to stay within a range of 7.9-8.3% in 2007-30. They see only one drawback in the development strategy: it does not specify the factors that will bring about this huge economic growth.

The Economic Development and Trade Ministry thinks they are finding fault. The strategy presents only its general opinion of Russia's economic future and the government's social targets, which are to raise living standards and reduce poverty.

The ministry will be ready by December with a more detailed forecast for the country's development until 2020. The comprehensive study will specify all indices, with a thorough analysis of every economic sector, and distribute responsibilities among ministries and other central-government agencies.

The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.

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The Arctic Crisis Part 1
Moscow (UPI) July 25, 2007
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