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Russian GDP May Grow Faster Than Estimated, Ulyukayev Says

Russia’s economy may expand faster than the government estimates this year as the euro-region debt crisis proves to be “manageable” for the country, said central bank First Deputy Chairman Alexei Ulyukayev.

Economic growth will probably be “closer to” 4 percent in 2012, faster than the official prediction for a 3.4 percent increase, Ulyukayev said at a conference in London today. Bank Rossii will hold inflation to its target range of between 5 percent and 6 percent this year, he said.

The economy of the world’s biggest energy exporter grew 4.9 percent in the first quarter from a year earlier, the fastest pace since the three months ended September 2011. President Vladimir Putin, who was inaugurated for his third term in the Kremlin on May 7, has said Russia’s growth must exceed the global pace of expansion over the next decade by gaining at least 6 percent annually to turn the economy into one of the world’s five largest by purchasing power by 2015.

Russia needs to undertake consolidation of public finance even as its fiscal position is relatively better compared with western European countries, Ulyukayev said.

The country is likely to see net capital outflows this year, he said, adding that outflows have totalled about $42 billion so far in 2012. These are mainly caused by companies failing to convert export earnings into rubles, and instead investing them in short-term assets in foreign currency, he said.

The European debt crisis will not lead Russia to reduce the proportion of its reserves in euros, Ulyukayev said.

“We still feel comfortable with the structure of our investments,” he said.

To contact the reporters on this story: Jason Webb in London at jwebb25@bloomberg.net; Agnes Lovasz in London at alovasz@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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