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. Last Updated: 07/27/2016

Government Confusion Is GDP Forecast Lottery

The crystal balls in the White House are getting cloudy.

The government this week has said the economy in 2003 will grow 4.6 percent, 5.5 percent, 5.4 percent and even 4.5 percent, leaving economists scratching their heads over exactly what the official forecast is for the year.

When the week started, the official prediction was 4.6 percent. But on Monday the Economic Development and Trade Ministry, in the monthly economic overview it puts on its web site, upgraded its outlook to 5.4 percent. By Wednesday morning, however, the ministry backtracked from the new figure, saying its official forecast would not change until the second half of July, when it has had time to fully assess the data for the first half the year.

"The 5.4 percent figure is a very, very preliminary one based on expectation of a very positive conditions, including high oil prices," a ministry spokeswoman said Wednesday afternoon. "For now, the official figure for GDP growth remains at the original 4.6 percent," she said.

The ministry was evidently in such a rush to correct itself that it posted an altogether new figure -- 4.5 percent -- on its site, www.economy.gov.ru. That figure, to the uninitiated, remained the official prediction of the government for all of a few hours.

Meanwhile, in real life and across town, Prime Minister Mikhail Kasyanov proudly announced to senators that economic growth would be no less than 5.5 percent.

"I think today I can make a braver forecast than the one I did two weeks ago. Most likely, the economy will grow about 5.5 percent this year," Kasyanov told the Federation Council.

Economists were slightly amused by the contradictory figures.

"It is a bit of a bizarre twist of events," said Peter Westin, senior economist at investment bank Aton, adding that the array of forecasts was likely a result of miscommunication, "a bureaucratic mess."

Many economists have already raised their official forecasts for the year on increasingly strong fundamental macroeconomic indicators, but the government's delay in embracing the trend until it has full first-half numbers is prudent, Westin said.

He also said the revision expected next month will likely be higher than the 5.4 percent that initially slipped from the Economic Development and Trade Ministry.

"An update is inevitable," he said. "Unless, of course, they know something we don't."

Roland Nash, head of equities at Renaissance Capital investment bank, said the exact figure the government comes up with is not really crucial since it only indicates trends. "But it is obvious that Russia is booming," he said.

Nash, pointing out that the State Statistics Committee earlier this year revised official growth figures for 1997, said the "numbers game" is becoming an "interesting exercise."

"But whether it's 4.5 or 5.4 makes no difference," he added.