A new report by the United Nations says the countries of the former Soviet bloc, after years of lagging behind, are now showing indications of strong economic growth. The Economic Survey of Europe, published Friday by the U.N. Economic Commission for Europe, says the market reforms that began more than a decade ago in these former Communist countries are starting to pay off.
While most of the world has been in the grips of an economic slowdown, the Economic Commission for Europe said the so-called transition economies of Eastern and Central Europe and the former Soviet Union have managed to put in a surprisingly good performance.
The report says the Gross Domestic Product of almost all of the 27 former Communist countries grew last year. Collectively, GDP increased by five percent, making the region one of the fastest growing in the world. According to the report, the main factor behind this dynamic has been the buoyant growth in the republics of the former Soviet Union, where a strong recovery continued for a third consecutive year.
The executive secretary of the U.N. commission for Europe, Brigita Schmognerova, said Russia's economy grew by 6.5 percent last year. She said there were several reasons for the strong showing.
"The main factors that made a direct contribution to Russia's growth were the strong performance in the energy sector, coupled with favorable market prices and also sharp real depreciation of the ruble after August, 1998. The Russian authorities also made a considerable effort to accelerate systemic transformation and market reforms," Ms. Schmognerova said.
Despite these positive developments, the report notes a number of uncertainties regarding Russia's economic prospects. For one, it says Russia's heavy dependence on oil exports entails risks because international oil prices are so volatile.
The report said most of the other republics of the former Soviet Union also improved their economies, as did the Baltic states and the countries of Eastern and Central Europe. But it said the rate of growth slowed in Hungary and Slovenia. And Poland has run into serious difficulty after nine years of rapid expansion.
Nevertheless, U.N. economist Rumen Dobrinsky said these formerly Communist countries are clearly beginning to benefit from their switch to a more market-based economy.
"This has been a very difficult transition. These countries have invested a lot of effort. They have suffered a lot of economic difficulties in this period. But it turns out that these reforms are starting to pay off. And we see now some of the fruits of these market-oriented reforms. These countries are becoming more efficient, more productive. They are able to respond to market signals," he said.
But the U.N. survey predicts slower growth in the transition economies this year, primarily because of the after-effects of the economic downturn in Western Europe and North America. And the report said if there is any growth at all in the major industrial countries this year, it will be very gradual.