Russia Forecasts 10.2% Contraction in 1st Half

July 13, 2009
Predicts a decline of 9.8% in industrial production as well

The Russian government expects the economy to shrink by 10.2% in the first half of 2009 and 6.8% in the second ahead of a turnaround in 2010, Ria Novosti and Interfax reported on July 13.

The agencies said official forecasts were for a decline of 9.8% in industrial production over the second half.

Capital investment in the July-December period should fall 24% compared with the second half of 2008.

But the economic development ministry has said Russian momentum should begin to pick up in the next six months in response to an improvement in the global economy and more flexible budget policies and as the government's anti-crisis measures begin to take effect.

The projections are based on an average oil price of $57 a barrel. Oil prices on July 8 were hovering close to $60 a barrel.

The economic development ministry sees possible growth of 1% next year, 2.6% in 2011 and 3.8% in 2012.

Prime Minister Vladimir Putin, during a cabinet meeting, meanwhile predicted a rebound in demand for Russian oil and gas as the global economy strengthens. "We are convinced that in the next few months gas consumers, in Russia and abroad, are going to buy more and that in the longer term demand will not only regain but will surpass its pre-crisis levels," he said.

Putin recalled that in the first half of the year Russian gas extraction declined 20.8%.

Copyright Agence France-Presse, 2009

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