State Duma Deputy forecasts slower economic growth in Russia

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MOSCOW, June 6 (RIA Novosti) - Mikhail Zadornov, Russian ex-Finance Minister (1997-1999), deputy of the State Duma (Lower House of the Russian parliament), forecasts the slowing of the economic growth in Russia in the medium-term perspective. He expressed this opinion on Monday at the conference, "Debt Market: Russia and Investment Possibilities in the CIS."

He explained that the oil prices in the first quarter of 2005 reached their historical maximum, 40% higher than in the similar period of 2004. "This situation cannot last long," the parliamentarian said.

Apart from that, the doubling of the nominal wages by the end of 2008 and the increase of the pensions by 80% by that time are the priority of the budgetary policy for the three next years. The amendments to the Budget-2005, sent to the State Duma, presuppose an increase in the expenditures to a value of 350 billion rubles (1.5% of the GDP), out of which 320 billion rubles will be forwarded to consumption.

"This is a substantial weakening of the budgetary policy," Zadornov said.

He added that by 2006 it is expected that the budgetary policy would be weakened by another 2% - 2,5%.

Mikhail Zadornov admitted that in the past five years the growth economic rate was not a bad one, an average of 6.5%. However, beginning with the middle of 2004 it started to slow down. This tendency was registered also in the first five months of 2005," Zadornov said.

Touching upon the causes of the slower economic growth, the State Duma deputy pointed out the dropping in the growth rate in the production and exports of oil due to the situation that had arisen with regard to the YUKOS. In 2005, according to him, the growth in the production of oil is forecast at the level of 4%. Thus, industry is no longer a locomotive of an economic growth.

Apart from that, the prices of the ferrous metallurgy products are also lowering at the world market. Thus, exports on the whole cease to be a motive power of the economic growth in Russia.

Comparing the situation with CIS countries, he said that judging by the results of the first four months of 2005, Russia occupies the 9th place among the 12 CIS countries in the growth economic rate. The comparison with India and China is also unfavorable.

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