DATE=8/17/1999
TYPE=BACKGROUND REPORT
TITLE=RUSSIA ECON
NUMBER=5-44075
BYLINE=PETER HEINLEIN
DATELINE=MOSCOW
CONTENT=
VOICED AT:
INTRO: It has been one-year since Russia's financial
meltdown. Last August 17th, the government devalued
the ruble and defaulted on billions of dollars in
debt, touching off what economists predicted would be
the worst economic downturn of the post-Soviet era.
But one-year later, signs of crisis are fast
disappearing. As V-O-A's Peter Heinlein reports from
Moscow, a new optimism is taking hold among those
hardest hit by the financial collapse.
TEXT:
/// SOUNDS OF SHOPPING CARTS ///
Opening time at Ramstore, a Turkish-owned supermarket
chain that recently opened its second location in
Moscow. Customers are waiting to get in. Ramstore is
the equivalent of the huge western supermarkets where
shoppers can find everything from groceries to
clothing to household appliances.
It boasts a huge free parking lot and 30-checkout
stands.
/// SOUNDS OF CASH REGISTER ///
Cashier Lyuba Grimova spends hours every day checking
out customers, most of who pay in cash, even for the
expensive items. She says except for a brief period
immediately after last August 17th, the store has been
consistently busy.
/// GRIMOVA ACT ONE - IN RUSSIAN - FADE
UNDER ///
With a laugh, she says -- either we have too few
cashiers or too many customers.
Ms. Grimova estimates business is the same as it was
one-year ago, and says customers do not mind paying a
few rubles more for the convenience of western-style
one-stop shopping.
/// GRIMOVA ACT TWO - IN RUSSIAN - FADE
UNDER ///
She says the middle class can afford things here. But
she notes that people like her mother, a teacher, and
others on government salaries, still have little
choice but to shop at traditional markets, where
prices average about five rubles, or 20-cents an item
less.
Experts are quick to note that the Ramstore phenomenon
is still relatively rare in Russia. For one thing,
the median income in Moscow is far above the national
average.
But economist Andrei Illarionov, one of the first and
certainly the loudest to predict last year's crash,
says he thinks the worst of the crisis is over. He
told V-O-A the devalued ruble is fueling a turnaround
by effectively reducing the real level of government
spending.
/// ILLARIONOV ACT ///
The most people think that the main roots of
economic recovery in Russia now is the
devaluation of ruble and it is true. But
devaluation of ruble is only one symbol of
lowering of tax burden on Russian economy, and
that is why the real root, the real reason of
the economic recovery in Russia in 1999 is
substantial reduction in effective tax rate, in
effective government expenditures in Russia.
/// END ACT ///
Mr. Illarionov's optimistic forecast is that 1999 may
be the year of strongest economic growth in Russia
since the end of the Soviet Union.
/// SOUNDS OF CASH REGISTER TOTALLING
///
And there is evidence to back up his prediction at the
cash register. Russia's middle class, thought to have
been hardest hit by last year's crisis, is making a
comeback.
That is not to say the crisis is over. The State
Statistics Committee says 51-million people, 35-
percent of all Russians, report incomes below the
poverty line, as opposed to 33-million one-year ago.
And that poverty level is about 38-dollars a month.
A large proportion of those are people on pensions,
which average about 18-dollars a month.
/// OPT /// There are also some worrying signs of
inflation, and possibly a further ruble devaluation,
on the horizon. For one, gasoline prices shot up more
than 15-percent in July, and shortages have caused
long lines at the pump.
But as with so many things here, there is another,
positive side to the gasoline price hikes.
Ironically, the jump in world oil prices may be the
best thing that has happened to Russia's heavily oil-
dependent economy all year.
A local industry analyst estimates the oil companies'
after-tax profit has soared from three-million-dollars
a day last year to 22-million-dollars a day at
present. /// END OPT ///
Economic experts say that on the whole, the Russian
government's decisions of last August 17th did serious
damage to the country, and to its international
reputation. They say that damage that will take years
to repair, but one-year later the hardy Russian
people, used to adversity, are charging back.
(SIGNED)
NEB/PFH/JWH/RAE
17-Aug-1999 10:50 AM LOC (17-Aug-1999 1450 UTC)
NNNN
Source: Voice of America
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