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IMF predicts 7.8% GDP growth for Russia in 2008

Analysis

The International Monetary Fund said on Monday, that Russia’s GDP will grow by around 7.8% this year, boosted by high oil prices, and that inflation is likely to exceed the government target.

“We expect demand to remain brisk and GDP to grow 7.75% in 2008,” IMF Mission leader Paul Tomsen told a news conference in Moscow on the results of his mission’s consultations with the Russian government. Tomsen said high world oil prices, a large inflow of capital, and an increase in crediting had provided dynamic growth in investment, productivity, incomes and consumption in Russia.

At the same time, inflationary pressure on the Russian economy is expected to remain, and consumer prices could rise 14% this year, he said. The Russian government’s inflation target for 2008 is 10.5%. Russia’s GDP grew 8.1% in 2007, and expanded at an annualized rate of around 8% in the first four months of the year compared to the government’s forecast of 7.6%. The Russian government has a range of measures planned for the second half of the year to restrain inflation.

According to Russia’s State Statistics Service (Rosstat), consumer prices in Russia grew 7.5% from January 1 to May 26. Last year’s inflation was 11.9%, up from 9% the previous year. Tomsen said that Russia’s financial system has been strengthening considerably, and that the ruble’s appreciation against world currencies has not harmed the economy’s competitiveness. (rian.ru)

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