Russia’s government will raise this year’s economic forecast after output growth accelerated last quarter as household demand caught up with a recovery in commodity exports, Deputy Economy Minister Andrei Klepach said.
Gross domestic product expanded an annual 5.4 percent in the three months through June, Klepach told reporters in Moscow today. That compares with 2.9 percent growth in the first quarter, the Federal Service of State Statistics said on July 1.
The recovery last quarter was mainly fueled by a return of domestic spending after global demand for metals weakened and the pace of export growth ebbed, Klepach said. The economy grew 1.1 percent from the first quarter, adjusting for seasonal swings, he said. The government will probably raise its current forecast for growth this year of 4 percent, he said.
“Economic growth continues but it hasn’t become investment oriented to the necessary extent,” Klepach said. “The sub- components of growth remain fairly fragile with the exception of consumer demand.”
The risk of low investment and a surge in imports may yet impede the recovery, Klepach told reporters. A more competitive Russian industrial sector and a weaker ruble could slow import growth, he said.
The ruble has appreciated 3.4 percent against the dollar since the end of June, according to Bloomberg data. The Russian currency was trading 0.5 percent higher today against the dollar at 30.1851 as of 4:22 p.m. in Moscow.
Imports grew 33.2 percent last quarter, compared with 40.8 percent growth in exports, Klepach said today. The country’s worst drought in a decade will reduce this year’s harvest to less than 80 million tons, he said, about 17 percent less than last year. That’s “no basis for panic,” he said, adding the grain shortage won’t affect inflation this month.
It’s too early to assess the impact of the drought, Klepach told reporters.