Russian Third-Quarter GDP Slows on Farming, Construction

Russia’s economy grew at the slowest pace since it began recovering at the start of 2010 last quarter as agricultural output and construction volumes shrank.

Gross domestic product expanded 2.9 percent in the third quarter compared with a year earlier, the Federal Statistics Service in Moscow said today in an e-mailed statement. That was in line with the initial Nov. 12 estimate, which topped economist forecasts. GDP expanded 4 percent in the second quarter and 4.9 percent in the first three months.

Russian policy makers signaled today they were moving toward easing borrowing costs after inflation stabilized, giving the central bank more leeway to spur growth. The economy cooled in the third quarter, with the slowdown extending into October, Bank Rossii said.

“Industrial production growth and retail sales slowed,” the central bank said in a statement after its rates meeting today. Still, indicators of business sentiment, combined with healthy lending growth and low unemployment are helping keep production near potential, according to the statement.

Wholesale and retail sales, an indicator of the household consumption that accounts for about half of Russia’s economy, grew 5.1 percent in the third quarter, slowing from a 6.9 percent pace in the previous three months, the statistics service said. Agriculture contracted 4.8 percent after drought damaged the harvest and construction output fell 3.2 percent.

GDP grew 3.9 percent in the first nine months of the year compared with the same period of 2011. That’s less than the 4.3 percent full-year expansion Russia had in 2010 and 2011.

To contact the reporters on this story: Scott Rose in Moscow at rrose10@bloomberg.net; Olga Tanas in Moscow at otanas@bloomberg.net

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

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