MOSCOW. (RIA Novosti economic commentator Mikhail Khmelev)
A report by the Organization of Economic Cooperation and Development (OECD) published on May 24 says that the world economy is not in for a decline. Despite certain risks, it is growing faster than in the past. Russia does not have to worry much, either. The OECD predicts that it will develop more slowly, but still faster than many other countries, and the growth of prices will be much less significant.
Russia is not a member of the OECD, which unites 30 countries recognizing the principles of representative democracy and free market economy. We were invited to start official talks on the OECD entry only in the middle of May this year.
Nonetheless, the report spotlights Russia and three other participants in the self-proclaimed BRIC (Brazil, India and China). True, the authors of the report only briefly mentioned Russia's GDP dynamics, budget deficit, balance of payments and prospects of reducing inflation, and devoted two paragraphs to the analysis. They believe in 2007 Russia's GDP will stand at 6.5%, which is the same as in the two previous years. But in 2008, the economic growth will slow down to 5.8%.
As the ruble's exchange rate is becoming less and less profitable for the national economy, its growth rates are slowing down. The impetus from its devaluation in August 1998 has exhausted itself. The monetary authorities are finding it more and more difficult to prevent the strengthening of the ruble, the experts conclude. They attribute the problem to the shower of oil money that has flooded the country. Moreover, in the last few months, there has been a considerable growth in domestic and foreign investment in the Russian economy. However, the experts do not expect a tangible decrease in the economic growth. The consumer boom and a rapid flow of investment in fixed assets are acting as a catalyst for the economy.
The inflation, which will slow down to 6.5% for objective reasons by 2008, is making its own contribution to economic stability. The authors of the report believe that the main reasons for this decrease will be a reduction in the foreign trade surplus from 9.8% in 2006 to 3.8% in 2008; continued de-dollarization and a slower increase in prices on the services of natural monopolies. Indeed, rapidly growing imports are capable of neutralizing part of the money that Russia is receiving in enormous quantities from energy exports. At the same time, the alleviation of the budget policy will complicate the efforts to curb inflation in mid-term perspective, the report concludes.
The OECD believes that Russia should concentrate its economic policy in mid-term perspective on improving the management of oil incomes and reducing the budget deficit without taking oil into account. The experts have praised the Russian government for easing the tax burden and streamlining the tax system.
The report pays much more attention to the analysis of the economic situation in the OECD member countries and in the world in general. We will mention only some of its provisions. The United States, the world economy's main driving force, has recently shown slower growth because of problems on the real estate market. But this decrease has been largely made up for by China's dynamic progress and Europe's restored growth.
According to the OECD forecast for economic growth rates, in 2007 the European countries (2.7%) will leave behind the U.S. (2.1%) and Japan (2.4%). But by 2008 the status quo will be restored. The American economy will speed up to 2.5%, and Europe and Japan will slow down to 2.3% and 2.1%, respectively. The authors of the report have pointed to the high risks of global inflation. They recommend that their members should increase base rates in order to fight inflation. The United States should not reduce them at least before the year expires. One of the main recommendations to Beijing is to prevent the Chinese economy from overheating by gradually increasing the yuan exchange rate.
The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.
