Russia's quarterly growth slows sharply to 2.7 percent

12th November 2010, Comments 0 comments

Russian growth slowed to 2.7 percent in the third quarter on a 12-month basis, the Federal State Statistics Service said on Friday, in line with analysts' expectations of poorer second-half performance.

This rise was down from a 5.2-percent jump recorded in the second quarter of 2010.

Russia had recorded 2.9-percent economic growth in the first quarter compared to the equivalent figure in 2009.

The Federal State Statistics Service report was preliminary and could be revised at a later date.

Earlier this month, the World Bank cited volatile capital flows and oil price uncertainties in cutting Russia's annual growth outlook from 4.5 percent to 4.2 percent.

The International Monetary Fund (IMF) for its part predicted a 2010 growth rate of 4.0 percent, which is also the figure penciled in by the Russian government.

The World Bank predicted 4.5-percent growth in 2011, which would then slow to 3.5 percent in 2012.

Russia was hard hit by the global economic crisis, with gross domestic product contracting 7.9 percent last year, a performance that was on a par with the worst years of its post-Soviet transition.

But Russia's reserve funds have recently blossomed thanks to the higher recent oil prices, helping it avoid some of the economic problems which have plagued some its European Union counterparts.

Economists warn that Russia's trade balance will struggle to support strong growth for the rest of the year as imports accelerate.

But Russia will likely experience a rapid recovery in bank lending in the final three months of the year, with credits to households boosting consumption in 2011, Denmark's Danske Bank said in a recent research note.

The bank was also investments recovering in the second half of 2011, with its analysts pointing to the second half of 2010 as Russia's most difficult post-crisis transition time.

"All in all, we see H2 10 as being the biggest struggle for the Russian economy in recovering the the severe drop in GDP in 2009," Danske Bank bank concluded.

© 2010 AFP

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