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. Last Updated: 07/27/2016

Industry Growth Tops 10%

Industrial output grew by 10.9 percent in June, posting the first double-digit gain since May 2006 as manufacturing boomed, the State Statistics Service said Wednesday.

The figure smashed economists' expectations of a 6.4 percent year-on-year gain, and the government is now likely to revise up its forecast that the economy will grow by 6.5 percent this year.

"Rock and roll -- what a number," said Al Breach, chief economist at UBS.

"We have had a 7.5 percent growth forecast from the beginning of the year and the government is moving in that direction. We have always been saying the risk is to the upside: We have a real boom going on here at the moment."

Economists said the figure was flattered by comparison with a relatively weak performance in the same month a year ago, but the output figure still showed the biggest gain since December 2003, according to historical data.

Growth accelerated from 6.7 percent in May in year-on-year terms. Month on month, industry output was up by 4.5 percent after a 0.9 percent gain in May.

Manufacturing gained by 15.6 percent, providing a strong argument against those who say a rising ruble is causing 'Dutch disease,' or a fatal loss of competitiveness by domestic industry.

"A lot of people have been saying Russia has Dutch disease, that the appreciation of the exchange rate will hurt growth. It is nonsense and these figures show it is nonsense," Breach said.

The State Statistics Service also said industrial output rose 7.7 percent in the first half of this year, compared with a gain of 4.4 percent in the same period a year earlier.