12 March 2004
"The World Markets and Russia: Combination of Circumstances"
For the first time in many years, the world’s largest economies are growing simultaneously. This will create favorable conditions for Russia to increase its exports and use export revenues to expand its domestic market.
Russia is currently witnessing what are perhaps some of the best international economic conditions in the last 10 to 15 years. The world economy has shaken off the stagnation of 2000-2001 to some extent, and last year the global GDP grew by 3.6 percent (compared to only 3 percent in 2000). Many are predicting the world economy will grow by 4.2 percent in 2004. In addition, both Europe and Japan will see renewed growth. For the first time in many years, the world’s main economies have started to grow at the same time.
The upswing in the world economy and higher demand, in particular from the increasingly natural resource-intensive economies of China, India and other Asian countries, have created a unique situation for Russia as an exporter of raw materials. Russia now has the opportunity to expand its exports significantly while prices are high and often continue to grow. For example, oil, which provides 28 percent of Russia’s export earnings, cost $28.60 per barrel of Brent oil on the average (compared to only $24.50 in 2001 and $14.30 in 1998). At the same time, Russia’s actual oil production increased by 11 percent last year.
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