Russia has entered its 10th consecutive year of expansion, fueled by revenue from crude oil and natural gas exports. The economy will probably expand 7.1 percent this year, compared with an earlier forecast of 6.5 percent, helped by high crude prices, Russian Finance Minister Alexei Kudrin said on April 11.
Another useful and clear indicator of the progress of Russian GDP is the monthly index of key indicators published by the Bank of Russia.
The average price of Russia's Urals blend of crude rose to $93.6 a barrel in the first three months, compared with $54.2 a barrel in the first quarter of 2007, according to the Economy Ministry.
Russia's Economy Ministry has revised its oil price projections for 2008 from $86 per barrel to $90 per barrel, according to an updated version of Russia's development condition scenarios prepared by the ministry. Oil price forecasts have also been altered from $75 per barrel to $78 per barrel for 2008, from $72 per barrel to $74 per barrel for 2010, and from $70 per barrel to $72 per barrel for 2011.
Russia's foreign trade grew 50.3 percent in the first quarter of 2008 compared to the same period a year earlier, the Economy Ministry reported. In Q1 2007, trade increased 15.7 percent from the same quarter of the previous year. Meanwhile, according to the ministry's data, in monetary terms exports increased 55.2 percent in Q1 2008 (against 5.3 percent in Q1 2007) and imports rose 41.6 percent (against 39.7 percent in Q1 2007).
Russia's Economy Ministry predicts that inflation will be 1.3-1.4 percent in April 2008, Director of the ministry's macroeconomic forecasting department Gennady Kuranov said. This year, the official said, Russia will continue to import inflation, however, this would have less significant impact. In 2007, imported inflation accounted for 3 percent, Kuranov noted. The Economy Ministry does not think inflation will top 10 percent in 2008, as it has already introduced a set of measures to curb price rise.
Russia's Economy Ministry has raised its fixed investment forecast for 2008 from 14.4 to 17.8 percent, as stated in the ministry's revised scenarios of national development conditions. Projections for fixed investment growth have also been revised from 11.4 to 15 percent for 2009, from 12.4 to 13.1 percent for 2010, and from 9.6 to 10 percent for 2011.
Meanwhile, the industrial production index saw only minor changes. The forecast for 2008 has been upgraded from 105.2 to 105.7, left unchanged at 105.5 percent for 2009, raised from 105.5 to 105.6 percent for 2010, and, once again, left unaltered at 105.1 percent for 2011.
The Consumer Price Index (SPI) stood at 100.3 percent in Russia from April 8 to 14, 2008, Russia’s Federal State Statistics Service has reported. Since January 1, prices have climbed by 5.6 percent, rising 0.8 percent from April 1 to 14, 2008, up from 3.8 and 0.3 percent in the same periods of last year, respectively. In April 2007, inflation was reported at 0.6 percent.
Prices for chicken eggs and plant oil increased the most (by 2.4 and 2.3 percent, respectively), while prices for bread, wheat flour and pasta rose slower, up 1.2-1.8 percent, down from 1.6-3.3 percent in the previous week.
In 12 regions, bread prices went up by more than 3 percent. In the Jewish Autonomous Region, rye and wheat bread increased by 17.8-18.7 percent, by 13.6-15.8 percent in the Leningrad region, by 8.2-10.2 percent in the Magadan region, and by 5.4-10.6 percent in the Kaluga region. Diesel fuel and automobile gasoline prices grew 1.5-1.6 percent.
Inflation in Russia stood at 4.8 percent in the first quarter of 2008, and 1.2 percent in March. From March 25 to 31 alone, consumer prices went up 0.3 percent, and they rose 0.5 percent from April 1 to 7.
In late March, Russia’s Economy Ministry raised its inflation forecast for 2008 from 7-8.5 percent to 7-9.5 percent. “The inflation target for this year will have to be raised due to rising food prices, particularly grain prices,” said Gennady Kuranov, Director of the Economy Ministry’s Macroeconomic Forecasting Department.
Inflation forecasts for 2009-2011 remained unchanged, Kuranov said. Inflation is expected to be between 6 and 7 percent in 2009, 5-6 percent in 2010, and 5 to 5.8 percent in 2011.
Russia’s gold and foreign exchange reserves stood at $511.8 billion as of April 11, $3.8 billion or 0.75 percent up from $508 billion a week before.
The reserves rose for the ninth week in a row. From February 8 to April 4, they increased by $27 billion, and in the nine weeks from February 7 to April 11 the reserves climbed by $30.8 billion, or 6.4 percent.
The significant rise in such a short time could be due both to the dollar’s depreciation against the euro and the Central Bank’s increased acquisition of foreign currency on Russia’s forex market, bringing the reserves to their highest level ever recorded.
As a result, Russia has slightly reduced its gap from China and Japan, which have the largest gold and foreign currency reserves in the world. China’s reserves top $1.68 trillion, up $57.3 billion in February 2008 alone, following a rise of $61.6 billion in January 2008. China is unrivalled in terms of gold and forex reserves, largely thanks to its huge trade surplus, fed by its growing exports to the United States. Japan’s reserves stood at $1.02 trillion as of the end of March, boosted by the euro’s significant appreciation against the yen and rising bond yields.
Gold and foreign currency reserves are highly liquid financial assets controlled by the Central Bank and the Finance Ministry. They consist of monetary gold, special drawing rights, the reserve position in the International Monetary Fund, and foreign currency.
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