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OECD Gives Russia Gloomy Prognosis
The latest OECD Economic Outlook predicts slowing economic growth in 2008 and higher inflation in Russia than the government has forecast. It has also expressed concern over government activeness in industrial policy. The growth of state investment in industry and infrastructure may become a major stumbling block in Russia's negotiations on OECD accession.
The OECD sees this year's economic problems continuing into the new year. The authors of the new review mention a worsening mortgage market in the United States, instable financial markets and worsening inflationary expectations. It predicts lower economic growth in all of its member states, Brazil Russia, India and China. The Moody's agency is in agreement. In its new review of EMEA (Europe, the Middle East and Africa) corporations in 2007 and 2008, it predicts increasing defaults. The World Bank, IMF and investment banks have painted similar scenarios. The OECD does note, however, that the results will not be too bad considering the recent shock the world economy has suffered. The Russian Ministry of Economic Development and Trade has predicted that the GDP in Russia will grow 6.6 percent next year (the OECD says 6.5 percent).
The OECD recommends that developed countries hold to strict monetary and economic policies and avoid protectionism. It also hopes for progress at the Doha round of WTO negotiations. Inflation, accompanied by weak monetary and budgetary policies, and increasing state intervention in the economy worry the OECD most in Russia. In its words, “Fiscal loosening is adding to inflationary pressures and the non-oil fiscal balance is set to deteriorate sharply this year. While the government has turned to artificial administrative measures to limit retail price increases, the key factor to bringing down inflation would be a return to a much tighter fiscal stance. Strengthening pro-competitive market regulations would certainly help but, in this respect, the trend towards ever greater state activism in industrial policy is a source of concern.”
Russia was invited to begin negotiations with the OECD in May of this year, and it has received a “road map,” a set of requirements for admission. The new publication is much more transparent than the recommendations of other international institutions, that is to say, its criticism is sharper.
www.kommersant.com
All the Article in Russian as of Dec. 07, 2007
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