Teaching Comparative Government and Politics

Monday, June 25, 2007

Politics and economics

Economics is often the basis for policy decisions. Thus, the booming oil economy has offered Russian decision makers new choices in the past few years.

The Economist reports that other parts of the Russian economy are also booming. Does that give Putin more choices? What choices might he be tempted to make?

Russia's booming economy

"Russian economic growth hit a six-year high of 7.9% year on year in the first quarter, propelled by strong growth in construction, manufacturing and trade. The result is particularly impressive in light of the small contribution made by oil and gas...

"State statistics agency RosStat released full first-quarter GDP data on June 14th. The main factors behind the 7.9% headline growth figure were a 23.2% rise in construction, an 11.8% expansion in manufacturing and a 9.1% increase in trade... In the year-earlier period, GDP growth was 5% and in the fourth quarter of 2006 it was 7.8%.

"... investment is very strong and this is powering economic growth... household consumption is buoyant... With real disposable incomes up by 13%, private consumption rose by 12.7%...

"Improving access to consumer credit is also helping to fuel demand. Domestic credit rose by 46.4%...

"... full-year GDP growth this year is likely to be within the official government forecast of 6.5-7%. Faster economic growth is unlikely while energy output growth remains sluggish and while Russia’s large-scale investment needs are not--even now--being fully met..."


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