Economic Development Ministry lowers forecasts for GDP in 2009

30.06.2009 (13:22) | ITAR-TASS

The Russian Economic Development Ministry has lowered its forecasts for the Gross Domestic Product (GDP) and industrial output, but upgraded a forecast for the trade balance and inflation in 2009, the Prime Tass economic news agency cited an official at the ministry as saying on Monday.

According to the Ministry’s preliminary estimates, Russia’s GDP will decrease by 8.5 percent, instead of the earlier forecasted 6-8 percent, Prime Tass said.

In compliance with an updated macroeconomic forecast, the GDP will edge up by 0.1 percent in 2010, Prime Tass said, adding that the indicator will grow by 3.2 percent in 2012.

The GDP may reach 38,400 billion roubles (USD 1 = RUB 31.29) by the end of 2009, as well as 41,920 billion roubles in 2010 and 45,790 billion roubles in 2012, Prime Tass said, recalling that initially this year’s GDP was forecasted at 38,800 billion roubles.

The Economic Development Ministry is more optimistic about the country’ s inflation rate, Prime Tass said, adding, the updated macroeconomic forecast envisages that this year’s inflation can make up 12-12.5 percent instead of 13 percent, which were projected earlier.

The Ministry also forecasts that Russia’s exports may increase as compared to initial projections, Prime Tass said.

According to the Ministry’s preliminary estimates, the country’s import may total 190 billion U.S. dollars (as against initially planned 194 billion U.S. dollars), while export will reach 274 billion U.S. dollars (initially forecasted 254 billion U.S. dollars), Prime Tass said.

Therefore, Russia will preserve a trade surplus, even though it will drop more than twofold from 2008, Prime Tass cited the ministry’s official.

Last week, the World Bank downgraded its forecast for Russia’s GDP in 2009.

“Given a much larger GDP contraction in the first two quarters of 2009 than anticipated, Russia's economy is now likely to contract by 7.9 percent in 2009, despite higher oil prices assumed in the current forecast. Most of the adverse impact in Russia is concentrated in the first two quarters of 2009,” Prime Tass quoted the World Bank’s report entitled, “Russia: From Crisis to Recovery.”

According to the World Bank’s report, “Looking into the medium term, with the current growth profile, real GDP levels in Russia will reach the pre-crisis high only at the end of the third quarter of 2012,” Prime Tass said.

At the same time, Deputy Minister of Economic Development Andrei Klepach said last Tuesday: “The decline [of the Gross Domestic Product] still continues. No reversal has occurred so far.”

“In May 2009, the country’s GDP dropped by eleven percent as compared to last May,” Klepach told reporters. In his words, the May GDP was 0.5 percent smaller than in April due to the seasonal factors.

In his words, the decline in Russia’s GDP was mainly caused by the decrease in investments, Prime Tass said.

The deputy minister believes that the situation with investments in Russia continues worsening, Prime Tass said, adding that the country’s investments shrank by 15.8 percent in January-May.

In May 2009, Russia’s investments dropped by 17.7 percent as compared to this April, Prime Tass cited Klepach as saying.

Moreover, a certain slowdown was registered in the construction industry, Prime Tass said, adding, Russia’s construction amounts went down by 5.9 percent in this May, as against April 2009, and dropped by 21.9 percent versus May 2008.

The deputy minister is also doubtful pertaining to the forecasted GDP index for 2009, which envisaged a six to eight percent decline.

“It will be practically impossible to make 6-8 percent decline in the country’s GDP by the yearend, if the indicator dropped by 10.2 percent over the first five months of the year,” Prime Tass cited the deputy minister as saying.

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