April 11 (Bloomberg) -- Russia's economy will expand faster than initially forecast this year, even as growth in the U.S. slows in the next two quarters, said Russian Finance Minister Alexei Kudrin.

The Russian economy probably will grow 7.1 percent this year, compared with an earlier forecast of 6.5 percent, helped by high prices for oil, Russia's major export, Kudrin told reporters in Washington D.C., where he is attending meetings of the International Monetary Fund and the World Bank.

Finance chiefs from the Group of Seven nations, also meeting in Washington, have said the global economic slowdown may worsen amid an ``entrenched'' credit squeeze and signaled concern over the dollar's slide. The U.S. currency reached a record low of $1.5913 against the euro this week.

``The expectations are for this crisis to be significantly worse than the one in 1998,'' said Kudrin, who did not participate in the Group of Seven's discussions today. Instead, he met Federal Reserve Chairman Ben S. Bernanke.

A possible decline in oil price is a ``very significant risk'' for Russia, the world's biggest energy exporter, Kudrin said. ``The price of $100 a barrel is unstable, speculative, and won't hold on for too long.''

WTO Bid

Urals crude oil, Russia's major export blend of oil, has surged more than 10-fold since 1998 to $104.72 a barrel today. The price may plunge from its current levels, Kurin said. It has been driven by a weaker dollar and demand for oil as a hedge against inflation, he said.

Russia wants to diversify its exports by joining the World Trade Organization and getting wider access to foreign markets. Most of the 152 member-countries of the trade arbiter have approved Russia's bid to join the organization. The United Arab Emirates is expected to give its approval in a week, Kudrin said.

The U.S. dollar has room to appreciate, although it may decline further in the near future, Kudrin said.

``America's economy is still in pretty good shape, even though the finance system is in crisis and that strengthens the possibility of a recession,'' Kudrin said. ``A decline in gross domestic product in the next two quarters may be expected.''

`Necessary Correction'

The expected decline in U.S. growth is ``a necessary correction,'' Kudrin said. ``The markets have a possibility to recover within the next year or possibly two or three years.''

Central banks in the U.S. and Europe need to ``coordinate actions'' to minimize the fallout of the credit crisis worldwide, Kudrin said. ``I hope this is what is happening now.''

The Russian government will allow its banks to bid for budget funds from next week to shore up lenders' liquidity, Kudrin said. He declined to comment on how much money will be available to the banks.

``The volume of such placements will depend on the market's needs,'' Kudrin said, adding that the banks will be able to keep the money for at least two weeks.

The Russian government said earlier it plans to allow banks to bid for between $10 billion and $15 billion in budget funds.

Net capital outflow from Russia reached $22.8 billion in the first quarter, according to the central bank's preliminary estimate. The figure compares with inflows of $20.8 billion in the fourth quarter of 2007.

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net.

Last Updated: April 11, 2008 23:49 EDT