Stores which once featured Western goods now displayed Russian-made products of equal quality at a lower price. Meanwhile, just as the fall in the world oil price in 1997-98 exacerbated Russia's financial crisis, so the recent rise in prices benefited Russia's balance of trade. Of course, such economic factors provide only short-term relief. The deeper problems of the Russian economy remain as acute as ever. Output cannot continue to rise unless consumer demand rises, yet real income was 26 percent lower in the first half of 1999 than in the first half of 1998.
Investment continues to decline.
Unemployment has risen to over ten million, or 12 percent of the work force. It's unlikely that Putin's appointment will have any impact on these chronic problems. Moreover, agriculture is in big trouble this year. Unusually dry and hot weather has wrecked havoc on crops, especially in the south of Russia. Large areas have been devastated by locusts arriving from Kazakhstan.