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Investment in Russia's economy grew 23.1% in May

Growth of investment in Russia's economy hit a record level of 23.1% in May, the economics minister said Thursday.

“The figure is 20.8% for the first five months of the year,” German Gref said. The minister said the growth was largely due to macroeconomic stability and companies' growing revenues. But he said the other side of the coin was that the $70 billion capital influx expected this year could create inflationary pressure. Inflation was 0.6% in June 1 until 25 and is expected to reach 0.6-0.7% this month. Compared to 0.3% inflation in June 2006, the minister attributed this year's higher rates to lower imports of vegetables, which picked prices 23% in May. The minister said the government hoped to keep the indicator no higher than the 8% target.

Gref said the government and Central Bank would manage to keep the appreciation of the ruble's real effective rate to the target of 4-5%. Over the first five months of the year, the rate of the ruble grew 2.3% against the currency basket. According to Gref, Russia's economy grew 7.7%, year-on-year, in the first five months of 2007. He said the higher-than-expected growth rate made the government consider raising its GDP target for the year to 7%, from 6.5%. Foreign trade surplus was $51.5 billion in the first five months of the year. Imports continued to grow, outstripping export growth. Exports expanded 9.9% in May and 8.7% in January-May, while imports increased 39.9% and 40.1%, respectively. (