Russia maintained its first position in terms of real growth in gross domestic product (GDP) in the third quarter of 2004, leaving behind other members of the elitist G8 Club, according to a report compiled by the Federal State Statistics Service (FSSS), the organ shouldered with the compilation of official statistics in the country.

The study was based on reports, publications and data compiled by leading international financial organizations such as the International Monetary Fund (IMF), Organization for Economic Cooperation and Development as well as national statistics agencies’ data which are made available for public use on the Internet in line with the IMF’s requirements on Special Data Dissemination Standard.

According to the FSSS report, which was released on March 1, Russia’s GDP growth rate increased by 7.1 percent, compared to the third quarter of 2003. The United States and Canada occupied the second and third positions, respectively, with GDP growth rates of 4 percent and 3.3 percent. The Great Britain followed with a growth rate of 2.9 percent, Japan with 2.5 percent, France with 2 percent, Italy with 1.3 percent, while Germany closed the list with just a 1.2 percent-growth rate.

Russia’s spectacular performance in 2004 was a continuation of what is gradually becoming a good and enviable tradition in the national economy. Russia’s leadership in GDP growth rates started five years ago in 2000, when it posted a growth rate 10 percent, an unprecedented performance among G8 members. Though the rate dipped to 5.1 percent in 2001, which was half the rate of the previous year, it was nevertheless enough to help Russia maintain its first position among the world’s most developed nations. The same position was maintained in 2002 and 2003, when Russia’s GDP growth rates were, respectively, 4.7 percent and 7.3 percent.

The positive GDP growth dynamics has long spilled over to other sectors of Russian life. For instance, Russia’s per-capita expenditure, growth rate in the third quarter of 2004, compared with the index of the previous year, was also the highest among the G8 countries. This index in Russia stood at 12.1 percent, while the United States and Canada with the second and third highest indices, increased their per-capita expenditures, respectively, by 3.6 percent and 2.9 percent. Similarly, Russia also led its G8 peers in terms of industrial production-growth rates. This index in Russia increased by 6.1 percent in 2004, compared with the index for 2003, and was also the highest in the G8 Club. Japan and the United States with the second and third best results, increased their industrial outputs, respectively, by 5.5 percent and 4.3 percent. Other G8 members’ growth rates of industrial outputs were a lot less. Germany posted 2.3 percent, France 2 percent and the Great Britain 0.1 percent, while Italy’s industrial output even decreased by 0.2 percent.

Russia also kept the first spot in terms of consumer-price growth, which increased in the country by 11.7 percent as of December 2004, compared with December 2003’s data. A similar index in the United States rose by 3.7 percent, Canada, Germany, Italy, receptively, by 2.2 percent, 2.1 percent, 2 percent, France 1.9 percent and Great Britain 1.6 percent. In terms of unemployment, however, Russia was in the third position with 8.5 percent of its active and able-bodied citizens officially unemployed in 2004, ceding the top spot to Germany whose unemployment index stood at 11.9 percent in 2004. France was second with 9.9 percent, Canada with 8.5 percent, Italy with 8.1 percent, the United States with 5.4 percent, the Great Britain with 4.7 percent and Japan with 4.1 percent

A record FDI windfall

The increase in GDP along with the overall improvement in the economy has led to a significant boost in the volume of foreign investments flowing into the country. For instance, Russia received $40.509 billion in foreign investments in 2004, an increase of 36.4 percent over 2003’s tallies, while the gross accumulated sum of all foreign investments in the country as at the end of 2004 stood at $82 billion, or increase of 43.8 percent from January 2004, according to the FSSS. Most of these investments came from the Netherlands, Luxembourg, Cyprus, Germany, the Great Britain, United States and France, which collectively accounted for about 79.7 percent of the accumulated sum of foreign investments in the Russian economy.

Foreign direct investments (FDIs), or strategic, long-term investments, flowed into Russian companies with effortless ease to peg at $9.42 billion, or 23.3 percent of the gross total of foreign investments in 2004, and about 39 percent higher than corresponding sum in 2003. Broken down, these included about $7.31 billion foreign investments funneled into charter capital of companies, $1.70 billion of loans received from foreign co-owners of Russian companies and $23 million in form of leasing.

On the other hand, the gross volume of portfolio investments (PIs), or short-term investments into fast-profit yielding assets, went down to peg at $333 million in 2004, or a decrease of 17 percent, compared with 2003’s data. Of this sum, about $301 million, or about 90.6 percent, was invested in stocks of Russian companies, while about $31 million were invested in companies’ bonds and debt securities. These represented a decrease of 18.2 percent and 3.3 percent, respectively, compared with similar data in 2003.

Other forms of investments (excluding FDIs and PIs) amounted to $30.756 billion or about 36.6 percent over 2003’s data. At the same, the volume of Russian investments abroad rose to $33.77 in 2004, an increase of 45.2 percent over 2003’s data.