Russia says growth slows to 3.7 percent

21st July 2011, Comments 0 comments

Russia reported on Thursday a slight slowdown in second-quarter growth but forecast a stronger end to the year that should help meet Prime Minister Vladimir Putin's 4.2-percent growth target.

Economy Minister Elvira Nabiullina told Putin that growth had slowed to 3.7 percent in the preceding three months compared to a 4.1-percent rate through March.

But she forecast a more robust second-half growth rate of 4.5 percent that benefited from a recent boom in investment.

"On the whole, we are seeing a fairly stable positive GDP trend," the minister told Putin.

None of the officials meeting with Putin explained the seasonally adjusted figures in comments broadcast on state television.

But Putin reaffirmed his politically-sensitive promise of seeing the budget deficit trimmed to a minimum in 2011 ahead of years of more heavy state spending on new national projects.

"We hope to see the budget deficit this year come down to a minimum and potentially even disappear," said Putin.

"We know the forecasts for 2012, 2013 and 2014 and it is no accident that we are planning a small deficit. Objective data from the economy of Russia and the world show that it will not be easy to lose this deficit."

Putin has predicted 4.2-percent growth this year -- well above a 3.8-percent forecasts reported by Moscow's Alfa Bank -- and expressed frustration at Russia's failure to match the 8.1 percent figure recorded in the last pre-crisis year of 2007.

But Russia's growth is being balanced against concerns about inflation.

Finance Minister Alexei Kudrin has repeatedly cautioned the government about setting its budget spending targets based on high expectation for the price of Russia's energy and other commodity exports.

He predicted a budget deficit this year of around one percent of the gross domestic product.

But the fiscally conservative minister cautioned: "This will depend on how strictly we follow out ministerial and agency spending recommendations."

Russia's 2011 budget is based on an average annual oil price of $105 dollars a barrel. Nabiullina's deputy said the expected figure may be revised upward slightly in September.

© 2011 AFP

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