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Today's paper. Last Updated: 06/02/2012

UN Predicts Continuing Slump in Russia

GENEVA -- Economic prospects for Russia are gloomy, with little chance of any recovery in output, employment and living standards next year, a United Nations report said Monday.


The report by the Economic Commission for Europe said the forecast for other former Soviet states was even worse, although it added that the economic revival in most East European countries would continue.


The UN economists said that output was expected to fall by 15 to 16 percent this year in Russia, and by 20 to 30 percent in other parts of the former Soviet Union.


It blamed the depth of the recession on a "restrictive but incoherent monetary policy'' which had led to sharp cuts in domestic demand as President Boris Yeltsin's government tried to bring inflation under control and cut agricultural and industrial subsidies and then changed policy under political pressure.


It said the registered unemployment rate of 1.9 percent (September figures) was a big underestimate and cited figures that it was above 12 percent.


"Only a radical, coherent and credible economic program, announced and decisively implemented by the government, can be expected to gradually reduce the instability and uncertainty in the Russian economy," the 130-page report said.


It went on to renew calls for more external financial assistance for the battered economy.


The report cast doubt on the political feasibility of a draft Russian budget which envisaged cutting the inflation rate to 1 to 2 percent per month next year at a cost of a 6 to 8 percent fall in output and an increase in unemployment.


"With its political base extremely narrow, the present government may simply be unable to get its program through parliament," it said.


"The prospects for the Russian economy in 1995 are rather gloomy and highly uncertain," it concluded.




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