Russian economy still faces uncertainty

MOSCOW, Nov. 5 (Xinhua) -- The Russian economy, which had been developing at high speed prior to the global financial turmoil and economic downturn, has suffered severe losses in the crisis. Nonetheless its prospect remains uncertain at present.

President Dmitry Medvedev estimated that Russia's 2009 Gross Domestic Product (GDP) may decline 7.5 percent compared with that of 2008.

Statistics showed that Russia's GDP contracted 10 percent in the first nine months this year. Though monthly GDP has continued to grow starting from June, none of the growth rates was higher than 0.5 percent.

Meanwhile Russia's industrial production declined 13.5 percent from January to September, with the process industry plunging 19.1percent.

One good news may be the high inflation that once bothered Russia has somewhat relieved. Prime Minister Vladimir Putin estimated that the inflation rate might be lowered to less than 9 percent this year.

However, lowering inflation rate turned out to have been followed by shrinking consumption.

The lowest monthly retail sales in recent years were recorded in August, with a decline of 9.8 percent compared to July. Residents' disposable income also shrank 6.8 percent in August, the highest among 2009.

The plummeting retail sales cannot be reviewed as positive when the economy shrinks, said Igor Nikolayev, head of strategic analysis department of Russia's first private auditing firm FBK.

In order to inject anti-crisis fund into real economy, Russian Central Bank has lowered its refinancing rate several times since April, from 13 percent to the current 9.5 percent. However, the capital inflow into the real economy was not quite smooth.

According to the financial daily Vedomosti, Russia's domestic loans have decreased some 300 billion rubles (around 10.3 billion U.S. dollars) since this fall, primarily caused by the harsh demands of commercial banks on credit quality and risk assessment.

Although the Russian government has paid special attention to people's livelihood while dealing with the crisis, including raising the pensions, Russian people were not so satisfied with the current anti-crisis measures.

Figures from the independent polling organization Levada Center showed that the percentage of respondents, who acknowledged the effects of financial crisis on their daily lives, has increased from 49 percent in March to 62 percent in September.

Some 39 percent of Russians believed their country was undergoing "the most difficult times," while another 33 percent thought the hardest days were still "lying ahead."

Numbers from Russia's Federal State Statistics Service also showed that every month the unemployed in Russia have been 10,000 to 15,000 more than those re-employed ever since January, concerning almost all sector including mining, construction, trade and finance.

Deputy Prime Minister and Finance Minister Alexei Kudrin once told reporters that there might be a surge in Russia's unemployment in the near future, triggering another outbreak of crisis.