The Report concentrates on the economic trends experienced in Russia during the transition and the substantial challenges faced by the Government to satisfy people’s expectations and to alleviate suffering. Massive "hyper-stagflation" and its economic and social consequences are described, both to the economy as a whole, as well as to the vast majority of citizens, whose standards of living have deteriorated dramatically during the transition. The various dimensions of poverty and income inequality are explored as well as their impact on the poor, pensioners, the unemployed, migrants and refugees. The corresponding impact on demographic indicators are described, which includes a fall in the population, a rise in mortality and suicide, a rise in divorce, and a rise in one parent families etc. On a more hopeful note, it is estimated that the economic decline is now slowing, and that renewed growth is expected to start in 1998, as the impact of the on-going structural reforms comes to be felt.