Russia: Clawing Its Way Back To Life

High oil prices and the weak ruble have industry boosting output-and making money

Russia is fighting another war in the breakaway region of Chechnya. More than $1.5 billion in flight capital is spirited out of the country every month by Russian mobsters and businesspeople. The stock market is down 28% since July.

But the outlook is not completely bleak. Thanks to rising oil prices and a weak currency, Russian industry is clawing its way back to life. In October, industrial production was up 10% compared with the same month a year earlier. Economists are predicting that gross domestic product will grow by 1% to 2% in 1999, after plunging 4.6% last year.

It's far too soon to say Russia is on the verge of a sustained recovery. So far, the government has resisted the temptation to print money and reignite inflation. But with parliamentary elections set for December, the pressure is on to fund pork-barrel projects. And no real recovery is possible until Russia tackles its institutional problems of corruption and tax evasion.

Nevertheless, the ruble's 80% devaluation since Aug. 17, 1998, has acted as a life raft for many Russian industrialists and entrepreneurs. Imports are now out of the reach of most Russians, and have dropped 50% in the last year. They have turned to local suppliers, who are happy to pump out household products, food, and cars. Here are the stories of three companies that are seizing the opportunities.

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