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EBRD expects Russia’s GDP to grow 7.2%, inflation 8.5% this year

The European Bank for Reconstruction and Development (EBRD) expects Russia’s GDP to grow 7.2% this year and inflation to be 8.5%, the bank’s transition report said on Thursday.

“Growth in Russia is expected to rise to 7.2% in 2007 (from 6.7% in 2006) and then drop back down to 6.5% in 2008,” the report said. Russia’s Finance Minister Alexei Kudrin, also a deputy premier, said on Wednesday that GDP growth would be 7.3%. The bank’s expectations on inflation in Russia look far more optimistic than forecasts by the Russian authorities, something EBRD put down to the timing of the report.

Earlier this month, the Russian Economic Development and Trade Ministry said annual inflation would exceed the target of 8% and hit 11% instead. Kudrin said it would top 10%. Erik Berglof, chief economist at the EBRD, said the Russian government had only recently revised its inflation forecast after a sharp rise in food prices. He also said the situation in the Russian banking sector had equally affected the Russian forecasts. (