Russia reports surprising 4.9% growth in first quarter

Russia on Tuesday reported robust first quarter growth of 4.9 percent that far outpaced last year’s performance and showed a surprising degree of consumer confidence lacking in other corners of Europe.

But analysts warned that the country’s energy-dependent economy could yet face serious headwinds should worries over the euro currency’s future and Europe’s financial health further drive down the price of oil.

The Rosstat statistics office failed to explain why its figure differed so radically from Economy Minister Elvira Nabiullina’s 4.0-percent estimate reported to now-President Vladimir Putin in April.

Russia’s economy grew a far more modest 4.1 percent in the first quarter of 2011 — about half the rate witnessed when Putin’s 2000-2008 presidency was winding down with energy prices at a record high.

The ex-KGB spy has now returned for a third term with street protests against his rule rocking Moscow and worries from investors about his team possibly lacking the resolve to implement painful economic reforms.

Russia’s capital flight of more than $80 billion last year is on pace to being matched again after the figure hit $35.1 billion in the first quarter.

A multi-billion spending programme unveiled by Putin ahead of the March election meanwhile threatens to increase Russia’s deficit should all the promises be met.

Those worries were tempered on Tuesday by signs of Russia still following its consumption-led model of growth.

The London-based Capital Economics research consultancy called the report “welcome relief following the disappointing first quarter GDP releases from elsewhere in Emerging Europe earlier today” and “impressive given the global backdrop.”

The eurozone avoided recession but reported zero growth in the first quarter. France’s economy also stalled in the first quarter while that of Portugal contracted by 0.1 percent.

Russia’s economy grew a more modest 4.1 percent in the first quarter of 2011 and reached 4.3 percent for the year.

Those figures were criticised heavily by the country’s now-sacked finance minister Alexei Kudrin — a respected fiscal conservative — as being too modest and incapable of making up for Russia’s remaining post-Soviet gap.

But initially hopeful estimates for future years have been revised down amid signs of Europe being incapable of solving its economic troubles in the immediate term.

Nabiullina’s economy ministry last month lowered the 2012 growth forecast to 3.4 percent from 3.7 percent predicted in January.

The figure is less optimistic than the International Monetary Fund’s prognosis of 4.0 percent.

Growth in Russia has been spurred for more than a year by consumer spending and expanding industrial production. Retail sales were reported to have grown by 7.5 percent in the first quarter alone.

Some of the current performance is also helped by Russia’s limited exposure to Western European banks now experiencing big problems.

“But the indirect effects of the euro-crisis on Russia could be equally severe, with the biggest risk being that it triggers a fall in oil prices,” Capital Economics said.

Moscow’s Alfa Bank meanwhile expressed concern that recent data pointed to Russia being unable to accelerate investment and now being threatened by a fall in inventories on which much of recent performance was also built.