MOSCOW: The Russian economy grew 2.5 percent year on year in the second quarter, its best annual rate since the third quarter of 2012, preliminary data from the Federal Statistics Service showed on Friday. The oil-dependent economy, which grew 0.5 percent in the first quarter of 2017, has now expanded for the third consecutive quarter as crude prices stabilised.
Capital Economics research firm said monthly activity data suggest that the economic recovery in the second quarter was “broad-based”, even though a detailed breakdown of the gross domestic product data will only be published later. “Growth in both the construction and industrial sectors picked up sharply, while retail sales growth returned to positive territory. Agriculture was the only key sector to contract in the second quarter,” Capital Economics said. Still, second quarter GDP growth was below the economy ministry’s prediction of 2.7 percent. The economy ministry said last month GDP would grow thanks to higher production of gas, coal and electricity amid cold weather this summer.
GDP returned to growth in late 2016 after seven quarters of contraction that were mainly caused by a drop in oil prices and Western sanctions over Russia’s role in the Ukrainian crisis. In the whole of 2017, the economy ministry expects GDP to grow 2 percent, above the central bank’s forecast for growth of up to 1.8 percent. Analysts, polled by Reuters at the end of July, were less optimistic as they had on average expected economic growth at 1.4 percent this year. Also on Friday, the central bank’s report on inflation showed it sees risks of a pick up in consumer prices growth, for which, it said, it would keep monetary conditions moderately tight. “At the margin, stronger-than-expected (economic) growth will weaken the argument for looser monetary policy,” Capital Economics said. The central bank, which last kept its key rate at 9 percent, will hold another rate-setting meeting on Sept. 15.