Weak June Economic Figures Attributed in Part to Football

Unexpectedly weak data could herald a Russian economic slowdown, the government said Monday, although a better-than-expected showing in the Euro 2008 football championship may be partly to blame.

The country's economic growth faltered in June to 6.5 percent from 7.7 percent in May, the Economic Development Ministry said. First half growth was 8 percent.

Data on Monday also showed a sharp easing in Russia's capital investment rate in June, while earlier data showed an abrupt slowdown in industrial output last month.

"There is some tendency toward growth slowdown, seen first of all in the industrial production and capital investment," Deputy Economic Development Minister Andrei Klepach said.

The Industry Ministry said in a statement that June data suggested Russian companies were finding it harder to stay competitive as costs and interest rates rise, the ruble strengthens and a global credit squeeze limits finance for modernization.

But some economists said it was too early to talk about a change in the country's rapid growth trend, driven by surging revenues for its oil exports.

"It is a blip. ... We expect a return to the strong underlying growth trend in July," said Rory MacFarquhar, at Goldman Sachs, one of the analysts who said the football frenzy could be behind the weak June data.

The Russian national team, seen as an outsider, reached the semifinals, crushing one of the favorites, Netherlands. The game kept millions glued to television screens. Large crowds celebrated victories all night and many took days off to recover.

Monday's data showed Russia's capital investment rate slowing sharply in June to 10.8 percent year on year, from 15.3 percent in May and well below analysts' forecast of 15.7 percent. The government sees 2008 investment growth at 14.4 percent.