GDP to Go up 5% in 2004

In 2004, Russia is expected to see a 5% GDP increase and a 8-10% inflation growth, First Deputy Russian Minister of Economic Development and Trade Ivan Materov told journalists on Wednesday.

The government expects oil prices to remain high, about $25.5 per barrel, throughout the year and in the first six months next year and then to decline. The Ministry of Economic Development and Trade has worked out two scenarios of economic development depending on the average annual oil price of $22.5 and $18.5 per barrel.

Having been discussed at a governmental meeting, the economic scenarios were then sent for revision so that international consequences of the Iraq war and expected changes in the tax legislation could be taken into account, Ivan Materov recalled.

According to the first deputy minister, the final wording allows for a 2% fall in VAT tax since 2004, effective rate decrease and introduction of a flatter single social tax scale, changes in the approach to considering the VAT at capital investment, as well as tax changes for raw industries. The changes made it possible to revise up the GDP growth rate by 0.4-0.7%, as well as investment activity indicators and consumer demand level.

Discussions on the document will continue up to Aril 30th at ministerial, departmental and regional levels, Materov said. In May, work will begin to specify the estimates and lay out development prospects for each sector. In July, the government is expected to pass a detailed economic development forecast.

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