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Bank Rossii Eases Further As Russia's Economy Contracts At A Record Rate

The ECB's Balance Sheet At A Glance.

Monday, June 16, 2008

Russia's GDP Growth Q1 2008

Russia's economy expanded an annual 8.5 percent in the first quarter, higher than previously estimated, as consumer demand fueled a continuing investment boom. The expansion followed 9.5 percent growth in the previous three months, the Moscow-based Federal Statistics Service said today.

Growth in, along with that in a number of other key emerging market economies is evidently far outpacing that in the United States, Japan and the euro region, and is at present one of the key drivers of global economic growth, not to mention oil and food prices.

Russia's economy, which is boosted enormously by commodities exports - is largely being driven by wage growth, investment and consumer spending at the present time and this is raising questions about distrortions and sustainability in the longer term. The rapid expansion is also fuelling inflation, which accelerated to 15.1 percent in May, and may be a signal that the economy is overheating.

Russian industrial output grew an annual 9.2 percent in April, the most in 9 months, as output of trucks, cars and construction materials surged.

Real wage growth has advanced more than 12 percent every month this year, increasing demand for housing and consumer goods. The government expects the economy, the world's 10th biggest, to expand 7.6 percent this year after growing 8.1 percent in 2007.

Demand from companies and consumers spurred import growth of 53 percent in the first quarter, compared with the same period in 2007, according to the Federal Customs Service. Russia's construction sector expanded 28.3 percent in the first quarter, the statistics service said, compared with 28.1 percent in the same period last year.

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