Russia cuts 2012 growth forecast to 3.4%

Russia’s economy will expand more slowly than anticipated this year due mainly to less a buoyant rate of growth in investments, the country’s economy minister said on Friday. Elvira Nabiullina told ministers she was cutting the GDP forecast to 3.4 per cent from an earlier 3.7 per cent, according to a statement. Andrei Klepach said last month Russia’s economic growth forecast might be cut but gave no figure. In 2011, the economy grew by 4.3 per cent. Nabiullina said the cut stemmed from a lower projection for investment growth of 6.6 per cent, down from an initial 7.8 per cent. The new projection signals a sharper slowdown from the fourth quarter of 2011, when growth hit 4.9 per cent partly due to higher state expenditure ahead of December’s parliamentary elections. In the run-up to last month’s presidential vote, Russia’s GDP grew by 4.8 per cent in February year-on-year after rising by 3.9 per cent in the previous month. Earlier this week, the economy ministry raised its forecast for average oil prices in 2012 to $115 per barrel from a previous estimate of $100 per barrel, edging closer to current Urals blend levels of around $123 per barrel. The government initially envisaged a budget deficit of 1.5 per cent of gross domestic product (GDP) in 2012, while Finance Minister Anton Siluanov said this week that the budget could end the year in the black if external conditions stay positive. Central bank Chairman Sergei Ignatyev said on Thursday that it will be difficult to keep this year’s inflation rate in a range of 5-6 per cent adding the regulator still sticks to its initial projection.