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Russia's economic situation under Putin's first 8 years

05-07-2012 15:28 BJT Special Report:Inauguration of Putin’s Return to Presidency |

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President-elect Vladimir Putin will be sworn in as Russian president on May 7. And the leader will helm one of Europe's strongest economies. The nation's balanced budget and high reserves lie in sharp comparison to the economy when his first term started in 2000.

During Putin's tenure, the Russian economy grew for nine straight years. Its GDP increased by 72% in Purchasing Power Parity, poverty decreased by more than 50%, and average monthly salaries were lifted from $80 to $640.

Within 8 years, the country's industrial output grew by 75%, investments increased by 125%, and agricultural production was raised as well. During the same period, the middle class grew from 8 million to 55 million people, while the population living below the poverty line also decreased from 30% to 14%. GDP figures showed that by 2007 Russia had overcome the devastating consequences of the 90s recession.

Analysts point to strong macroeconomic management, important fiscal policy reforms, surging capital inflows, access to low-cost external financing and a several-fold increase in the price of oil and gas driving these achievements.

But, the growing economy has not been without issues. Russia's economic growth is heavily dependent on raw material exports, especially oil and gas. Payments from the fuel and energy sector in the form of customs duties and taxes account for nearly half of the federal budget's revenues.

And inflation remains a problem. Between 1999 and 2007, it was held at its forecast ceiling only twice.

There is also a growing gap between rich and poor. Between 2000 and 2007, the incomes of the wealthy grew from approximately 14 times to 17 times that of the poor.

Editor:Wang Chuhan |Source: CNTV.CN

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