Russia Cuts 2013 Economic-Growth Forecast to 1.8%, Klepach Says

Russia cut its 2013 economic-growth forecast for the second time this year, Deputy Economy Minister Andrey Klepach said.

Gross domestic product will rise 1.8 percent, compared with an earlier estimate of 2.4 percent, Klepach said by phone from Moscow today. The government’s forecast for industrial-output growth was cut to 0.7 percent from 2.0 percent, he said. The government originally predicted 3.6 percent economic expansion this year.

The world’s biggest energy exporter is struggling to stem its steepest slowdown since a 2009 contraction as the euro area’s recession and weaker growth in Asia curb demand for its products. President Vladimir Putin’s government submitted a plan to revive economic growth, including measures to reduce borrowing costs for businesses.

“What the Economy Ministry has done is essentially just a reflection of current trends and doesn’t provide any new information,” Maxim Oreshkin, chief economist for Russia at VTB Capital in Moscow, said by phone. The updated forecast still suggests that growth will be better in the second half of the year than in the first, he said.

The benchmark Micex stock index fell 0.6 percent to 1,385.09 as of 4:49 p.m. in Moscow.

Russian GDP expanded 0.1 percent in the April-June period from a quarter earlier compared with 0.2 percent growth in the first three months of the year, according to Economy Ministry.

“It’s not recession, but stagnation,” Klepach told reporters Aug. 20.

GDP will grow 2.6 percent this year, according to the median estimate of 42 economists in a Bloomberg survey last month. The pace of expansion was projected to pick up to 3 percent in the third quarter and 3.4 percent in the fourth.

The central bank, which left its main rates unchanged for an 11th month Aug. 9, resisting government calls to cut rates as inflation remains above its target range of 5 percent to 6 percent this year.

Before it's here, it's on the Bloomberg Terminal.