Russia's Growth Slows to 2.7% in Q3

Nov. 12, 2010
Growth in Q2 was 5.2%

In line with analysts' expectations of poorer second-half performance, growth slowed to 2.7% in the third quarter on a 12-month basis, the Federal State Statistics Service said on Nov. 12

This rise was down from a 5.2% jump recorded in the second quarter of 2010.

Russia had recorded 2.9% economic growth in the first quarter compared to the equivalent figure in 2009.

Earlier this month, the World Bank cited volatile capital flows and oil price uncertainties in cutting Russia's annual growth outlook from 4.5% to 4.2%.

The International Monetary Fund (IMF) for its part predicted a 2010 growth rate of 4%, which is also the figure penciled in by the Russian government.

The World Bank predicted 4.5% growth in 2011, which would then slow to 3.5 percent in 2012.

Russia was hard hit by the global economic crisis, with gross domestic product contracting 7.9% last year, a performance that was on a par with the worst years of its post-Soviet transition.

But Russia's reserve funds have recently blossomed thanks to the higher recent oil prices, helping it avoid some of the economic problems which have plagued some its European Union counterparts. Economists warn that Russia's trade balance will struggle to support strong growth for the rest of the year as imports accelerate.

But Russia will likely experience a rapid recovery in bank lending in the final three months of the year, with credits to households boosting consumption in 2011, Denmark's Danske Bank said in a recent research note.

The bank was also saw investments recovering in the second half of 2011, with its analysts pointing to the second half of 2010 as Russia's most difficult post-crisis transition time. "All in all, we see H2 10 as being the biggest struggle for the Russian economy in recovering the the severe drop in GDP in 2009," Danske Bank concluded.

Copyright Agence France-Presse, 2010

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