Govt raises 2002 GDP, output forecasts
MOSCOW - The Russian government said on Friday it had increased its gross domestic product and industrial output forecasts for this year, but warned that without more reform the economy would not expand further.
The Economic Development and Trade Ministry said on its Web site www.economy.gov.ru that it had increased its GDP forecast to 3.9 percent from 3.8 percent and industrial output to 4.4 percent from 3.7 percent.
The ministry said July GDP growth stood at 5.3 percent in year-on-year terms, compared with 5.8 percent growth last July. GDP growth in June was four percent.
Cumulative GDP for the first seven months of 2002 was four percent higher than a year earlier - slightly more than the 3.8 percent year-on-year increase recorded in the first six months.
Alexei Zabotkine, chief economist at UFG investment bank, told Reuters he was surprised by the ministry's decision to revise its GDP forecast by just 0.1 percentage point.
"Given the quality of our statistics, this is within the error area and essentially does not change anything," he said.
Zabotkine said the difference between the change in the GDP forecast and the change in industrial output forecast was also surprising. Industrial output accounts for about a third of Russia's GDP structure.
"Services are obviously growing at quite high rates...some investment in agriculture has started this year," he said.
The ministry said the non-ferrous metals industry made the largest contribution to industrial growth in the first seven months of the year, expanding 10.2 percent over January-July 2001.
The food industry came second with a 8.5 percent rise, while the oil sector was third with a 8.2 percent expansion.
Russia's foreign trade surplus in the first seven months of this year was $24.6 billion. Exports stood at $56.2 billion, a fall of 5.6 percent, while imports were $31.6 billion, an increase of 7.8 percent.
FURTHER REFORMS NEEDED
But the ministry warned that without further structural reforms the economy would not be able to keep expanding.
"The possibilities of supporting sustained growth within the current industrial structure and capacities are close to exhaustion," the ministry said.
"To speed up growth more active structural reforms, further debureaucratisation, the creation of conditions for investment inflow and the development of new technologies and companies are necessary."
Analysts agreed, saying their GDP forecast for 2002 was higher than that for 2003, a parliamentary election year.
Vladimir Tikhomirov, chief economist at NIKoil investment house, said the government would not allow gas monopoly Gazprom , national power utility UES and railways to hike prices next year significantly, effectively cutting their ability to investment.
"I do not expect that the global economy will recover next year, while oil prices will not be as high as now," said Tikhomirov, who sees 2002 GDP growth at 4.1 percent and at 3.1 percent in 2003.
"And if the Economic Development and Trade Ministry is right, we shall push structural reforms forward, which will slow economic growth down."
/Reuters/
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