I. Pre-reading task. Unit 5.1. Economy of Russia

Unit 5.1. Economy of Russia

Suggest a purpose for reading the text. How can you describe the present state of the Russian economy?

II. Read the text to fulfil the tasks

The Soviet Union had a centralized state control over virtually all means of production, exchange, distribution and investment. The Soviet Union also had a planned economy. Economic policy was made according to directives from the Communist Party, which controlled all aspects of economic activity.

Russia undertakes the transition to fully-developed market economy with challenges and obstacles. However, Russian economy has great potential for growth. Russia possesses huge supplies of many of the world's most valued natural resources, especially those required to support a modern industrialized economy. It also has a well-educated labour force with substantial technical expertise. At the same time, Soviet era management practices, old infrastructure, and inefficient supply systems hinder efficient utilization of those resources.

Russia overcame the financial crisis of 1998 and experienced GDP growth averaging 6.5% annually since then up to the global financial crisis in 2008. At present the GDP growth is about 4 % annually. Although high oil prices and a relatively cheap ruble are important factors of these economic successes, since 2000 investment and consumer-driven demand have played a noticeably increasing role.

Real fixed capital investments have averaged gains greater than 10% over the last four years and real personal incomes have increased over 12% on average. Russia has also improved its international financial standing since the 1998 financial crisis, with its declining national debt.

Strong oil export earnings have allowed Russia to increase its currency reserve. These achievements, along with a renewed government effort to advance structural reforms, have raised business and investor confidence in Russia's economic prospects. Nevertheless, serious problems exist. Oil, natural gas, metals, and timber account for more than 80% of exports, leaving the country vulnerable to swings in world prices. Russia's manufacturing base is dilapidated and must be replaced or modernized if the country is to achieve considerable economic growth. Other problems include a weak banking system, a poor business climate that discourages domestic and foreign investors, corruption, local and regional government intervention in the courts, and widespread lack of trust in institutions.

GDP:	Purchasing power parity $1,282 tril­lion
GDP— real growth rate:	3.8% (2012 est.)
GDP — per capita:	purchasing power parity $8,900
GDP — composition by sector:	agriculture: 5.2% industry: 35.1% services: 59.8% (2012 est.)
Population below poverty line:	25% (January 2012 est.)
Inflation rate (consumer prices):	13.7% (2012 est.)
Labor force:	71.68 million (2012 est.)
Labor force — by occupation:	agriculture 12.3%, industry 22.7%, services 65% (2012 est.)
Unemployment rate:	8.5% plus considerable underemployment (2012 est.)
Budget:	revenues: $83.99 billion expenditures: $73.75 billion
Public debt:	34.1% of GDP (2012)
Agriculture — products:	grain, sugar beets, sunflower seed, vegetables, fruits; beef, milk
Industries:	complete range of mining and extrac­tive industries producing coal, oil, gas, chemicals, and metals; all forms of machine building from rolling mills to high-performance aircraft and space vehicles; shipbuilding; road and rail transportation equipment; com­munications equipment; agricultural machinery, tractors, and construction equipment; electric power generating and transmitting equipment; medical and scientific instruments; consumer durables, textiles, foodstuffs, handicrafts
Industrial production growth rate:	3,8% (2012 est.)
Electricity — production:	915 billion kWh (2012)
Electricity — consumption:	773 billion kWh (2012)
Electricity — exports:	21.16 billion kWh (2012)
Electricity — imports:	7 billion kWh (2012)
Oil — production:	7.286 million bbl/day (2012 est.)
Oil — consumption:	2.595 million bbl/day (2012 est.)
Natural gas — production:	580.8 billion cu m (2012 est.)
Natural gas — exports:	205.4 billion cu m (2012 est.)
Natural gas — imports:	32.7 billion cu m (2012 est.)
Exports:	$134.4 billion (2012 est.)
Exports — commodities:	petroleum and petroleum products, natural gas, wood and wood products, metals, chemicals, and a wide variety of civilian and military manufactures
Exports — partners:	Germany 7.8%, Netherlands 6.5%, Italy 6.3%, China 6.2%, Belarus 5.7%, Ukraine 5.7%, US 4.6%, Switzerland 4.4% (2012)
Imports:	$74.8 billion (2012 est.)
Imports — commodities:	machinery and equipment, consumer goods, medicines, meat, sugar, semifinished metal products
Imports — partners:	Germany 14%, Belarus 8.6%, Ukraine 7.7%, China 5.8%, US 5.2%, Ka­zakhstan 4.7%, Italy 4.2%, France 4.1% (2012)
Reserves of foreign exchange & gold:	$76.94 billion (2012)
Debt— external:	$175.9 billion (2012)
Currency:	Russian ruble (RUR)

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