Russia: Economic growth moderates in third quarter on plunging agricultural output
December 10, 2010
In the third quarter, gross domestic product (GDP) expanded 2.7% over the same period last year, according to revised estimates from 10 December. The reading almost halved the 5.2% year-on-year growth tallied in the previous period and confirmed the result from the preliminary estimate released on 12 November. The slowdown compared to the previous quarter was broad-based, as two of the three main sectors deteriorated compared to the second quarter. In particular, the moderation in growth was driven by the agricultural sector, which plunged 16.6% over the previous year (Q2: +1.7% yoy) amid the severe drought and devastating wildfires that afflicted key agricultural areas during the summer months. Industry expanded 6.5% in the third quarter, down from the 11.3% expansion tallied in the second quarter. while services improved from a 2.6% expansion in the second quarter to a 3.2% rise. According to its latest official forecast, the Economy Ministry expects the economy to expand 4.0% this year, accelerating slightly to 4.2% growth next year. However, Deputy Economy Minister Andrei Klepach stated on 30 November that he expects economic growth to be around 3.8% in 2010. In an 8 December statement, the Chairman of the Central Bank Sergei Ignatyev shared the Minister's opinion on 2010 growth, while suggesting that the economy may grow 5.0% in 2011, almost a full percentage point above the official government's forecast.
Author: Armando Ciccarelli, Head of Data Solutions