Forecasts Raised for GDP, Urals

The Economic Development and Trade Ministry on Monday raised its forecasts for inflation, gross domestic product growth and the average price for Urals crude for 2008.

The ministry increased its inflation forecast by 1 percentage point to 9.5 percent for the year, while raising its GDP growth prediction to 7.1 percent from 6.6 percent, a ministry spokeswoman said, citing ministry data. She spoke on the customary condition of anonymity.

The ministry also revised its estimate of the average price for Urals crude to $86 a barrel from $74, she said.

Rising food and grain prices necessitated the inflation increase, said Gennady Kuranov, head of the ministry's forecasting department. Efforts to tame inflation "evidently won't have sufficient influence this year to meet the previous target," he said.

The annual inflation rate increased to 12.7 percent from 12.6 percent in January, the Federal Statistics Service said in an e-mailed statement Monday. It was the quickest pace since July 2005.

"High investment growth and trade turnover," were the main reasons for raising the 2008 GDP growth forecast, Kuranov said. Capital investment increased by an annual 21.2 percent in February, the highest rate since June last year, the statistics service said. Retail sales grew by 17 percent in February compared with a year ago, it said.

Capital inflow will decline from a record $82.3 billion last year to between $30 billion and $40 billion, Kuranov said.