Russia Says Marginal Growth Signals End to Depression

Russian leaders declared an end to the post-Communist era of economic depression Monday with news of the first growth in quarterly economic indicators since capitalism dawned in Russia.

The proclamations were based on figures that included a mere 0.2% rise in gross domestic product--hardly cause for jubilation in most developed countries.

But coming after at least six years of steady and severe shrinkage, and coinciding with other signs of improving economic health, the slight January-March expansion was greeted here as the start of a long-awaited turnaround.

“The great depression of the Russian economy that has been in evidence for decades has halted,” said Yuri Yurkov, chairman of the State Statistics Committee, at the periodic briefing that until this quarter had been a dispiriting affair. “It is time to end the lamentation that everything is about to collapse.”

Russia suffered a 6% reduction in GDP in 1996--half of it in the first three months. That was a particularly bitter showing because growth had been predicted.

Some analysts questioned the government figures released Monday. British economist Richard Layard, head of the Russian-European Center for Economic Policy, said the figures reflected accounting changes and that the Russian economy actually remained flat for the first few months of 1997, the Itar-Tass news agency said.

Nonetheless, the improved figures released Monday were the first good economic news in Russia since the Soviet Union disappeared, along with its misguided economic planners, in 1991.

The government’s optimism was bolstered by a separate report documenting a reduction in the government’s debt to state workers and pensioners. That backlog had been growing exponentially for the past two years since the government began covering its shortfalls by holding back on its obligations, taking advantage of the “float” to earn short-term interest.

The amount of overdue wages owed by the government shrank by 4% over a two-week period ending April 7 to about $5.3 billion, probably due to payments made as the government attempted, with partial success, to defuse a nationwide day of protest that idled millions March 27.

President Boris N. Yeltsin appeared to be giving himself a pat on the back Monday for elevating advocates of market reform when he observed to his unpopular prime minister, Viktor S. Chernomyrdin, that the government “has started working more efficiently following the recent reshuffles.”

Itar-Tass quoted Yeltsin as praising the pair of first deputy prime ministers he appointed to help orchestrate a turnaround in popular support for Russia’s monumental transition to capitalism.

Yeltsin last month reassigned his former chief of staff, Anatoly B. Chubais, to reshape economic policy and later named Boris Y. Nemtsov, then the popular governor of Nizhny Novgorod, as another first deputy, in charge of social affairs.

Those promotions have created a more supportive atmosphere for the transition, which under Chernomyrdin’s administration acquired a negative taint as workers watched a few well-connected former Communist fat cats benefit while wage earners suffered.

World Bank President James D. Wolfensohn was visiting Moscow on Monday. His announcement that the bank probably will allocate $6 billion to Russia during 1997 and 1998 served to underscore the growing confidence of international lenders in the permanence and promise of Russia’s recovery from more than seven decades of Communist economics.

But the overriding reaction of Russia’s economic architects was one of hope tempered by caution.

“It’s promising,” newly appointed Labor and Social Development Minister Oleg Sysuyev observed of the GDP growth. “But we have to bear in mind that even one mistake in the administering of economic policy could throw the situation back into catastrophe.”