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By Oleg Mityayev
, RIA Novosti economic commentator
The World Bank, which criticized
Russia for its weak financial and investment policies in the 90s,
its first decade of economic reforms, published new views on June 6
in the Russian Economic Report 14.
According to the report, sky-high
oil prices will keep pumping dollars into the Russian economy,
spurring its GDP growth. However, the influx of petrodollars and
foreign investment will prevent the Russian government from keeping
inflation within the projected limits, says the World Bank.
“Russian investment growth has
mushroomed into a genuine boom in early 2007,” the report says,
forecasting that this growth would break the 2000 record of 17.4
percent. In other words, Russia’s GDP will continue to grow at a
fast pace. Chief Economist for Russia John Litwack said GDP would
grow by more than 7 percent in 2007, which is considerably higher
than the government’s forecast of 6.5 percent.
The commodities sector and
metallurgy remain the most profitable investment sectors in Russia,
along with the booming domestic market, which has been growing
rapidly thanks to rising purchasing power. The report notes
“exceptionally high growth” in Russia’s manufacturing in early
2007, which came as a complete surprise to the Russian government.
World Bank experts attributed the increase to seasonal factors, such
as “an unusually warm winter” and “a low base in 2006.” They
also said: “A good part of this demand might be associated with
large state companies…”
Economic growth also facilitated
an increase in wages: “Current trends in wage growth, together
with the continued real appreciation of the ruble, suggest that the
average monthly dollar wage in Russia for 2007 should exceed
US$500.”
A substantial part of Russia’s
population could only dream about such a wage 10 years ago, when the
ruble was losing value compared with the dollar. But now that the
American currency costs only 25.8 rubles per US$1.
In the current situation,
Russians would like their wages to grow faster than inflation, which
went up to 4.7% in January-May, according to the Russian government.
The World Bank reported that official estimates placed wage growth
at 18.5% in January-April.
“Almost all sectors of the
economy reported wage growth above 15%. Wage growth was the highest
in the public sector, trade and construction [about 22%-23%],” the
report reads.
This is interesting since the
public sector is “part of the economy concerned with providing
basic government services” and therefore does not produce new
value.
(The opinions expressed in
this article are the author’s and do not necessarily represent
those of RIA Novosti.)
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