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. Last Updated: 07/27/2016

GDP Rises 8.3% on Consumer Demand

The economy expanded by an estimated 8.3 percent in February year on year as investment and consumer demand both grew rapidly, the Economic Development and Trade Ministry said Monday.

The ministry's monthly economic report showed gross domestic product grew by 8.4 percent in the first two months of 2007, compared with 5.1 percent in the same period of last year.

It revised up its January 2007 GDP data to 8.5 percent from 7.2 percent previously.

"The high rates of the economic growth at the start of 2007 were based on rapid growth of investment demand, construction and manufacturing, and were also helped by strong levels of consumer demand," the report said.

The ministry said growth in real disposable incomes and real wages as well as booming consumer lending supported retail trade in the first two months of the year.

Real disposable incomes rose by 12.5 percent in February, year on year, while real wages were up 17.5 percent. But export growth slowed, the ministry said, hit by a fall in global oil prices, while imports continued to expand sharply, helped by rising investment activity and a strong ruble.

Ruble appreciation was 1.1 percent in February and 2.8 percent in January-February, allowing for inflation and other factors, according to the data from the Economic Development and Trade Ministry and the Central Bank.

Against the dollar, the ruble rose by 1.1 percent in real terms, the ministry said, and 1.8 percent in January-February.

Capital investment by Russian companies rose by 19.6 percent in February and was also up 21.2 percent in the first two months of the year, the ministry said, adding that the growth was accompanied by acceleration in the construction sector.

The ministry said moderate consumer price growth at the beginning of the year was mainly due to a rising supply of goods, including from imports.

Russia's CPI rose by 2.8 percent in January-February 2007, compared with 4.1 percent in the same period in 2006.

The ministry said the strong GDP number was also a result of comparison with a slowdown at the start of last year due to extremely cold temperatures.

The ministry forecasts full-year 2007 GDP growth at 6.2 percent, compared with 6.8 percent in 2006.

The trade surplus narrowed by one-quarter in the first two months of 2007 from the year-earlier period as oil prices fell. The surplus shrank 25.5 percent to $17.9 billion, the ministry said on its web site.

Revenue from foreign trade grew to an estimated $68.2 billion in the first two months, up 10.4 percent from a year earlier, the report showed.

The Central Bank will release its figures for trade in February on April 11.

Reuters, Bloomberg