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Consumer demand driving Russian economy
February 2, 2018, 3:19 pm

Counter-sanctions imposed on food imports and an unprecedented raft of subsidies have made many areas of farming more profitable in Russia [Xinhua]

Consumer demand has driven economic growth in Russia, the Central Bank said on Friday, adding that GDP growth in the first six months should reach between 1.0 and 1.5 per cent.

This is slightly lower than an earlier forecast.

It also cited “further recovery of production activity” and near-record low inflationary expectations.

In early January, the World Bank said that GDP growth in Russia would be steady at 1.7 per cent growth this year.

That’s quite a hefty jump from last year: The IMF in January 2017 forecast that Russia would only grow by 1.1 per cent in 2017.

Full year figures have not yet been published, but the Russian economy expanded by 1.8 per cent y/y in the third quarter of 2017, following a 2.5 per cent y/y gain in the second quarter and better than the consensus forecast of 1.6 per cent.

In the face of sanctions, Russia has moved to diversify its economy, pursuing investments in different sectors and with different European, Chinese and Japanese firms, to name a few.

Russia’s GDP growth rose 1.5 percent year on year in 2017, the Rosstat state statistics service also said.

This has helped Russia exceed expectations both in terms of growth and low inflation.

The near-stabilization of oil prices above the $60 mark has also helped boost revenues as most economic policy was designed with oil prices at $40.

The Central Bank is scheduled to hold its next meeting next week.

The BRICS Post with inputs from Agencies

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