Russia cuts 2012 growth forecast to 3.4 percent

MOSCOW Fri Apr 6, 2012 6:11am EDT

Minister of Economic Development Elvira Nabiullina (C) attends a commission on Russian economy modernization and technological development at Gazprom headquarters in Moscow December 25, 2009. REUTERS/Sergei Chirikov/Pool

Minister of Economic Development Elvira Nabiullina (C) attends a commission on Russian economy modernization and technological development at Gazprom headquarters in Moscow December 25, 2009.

Credit: Reuters/Sergei Chirikov/Pool

MOSCOW (Reuters) - Russia's economy will expand more slowly than anticipated this year due mainly to less a buoyant rate of growth in investments, the country's economy minister said on Friday.

Elvira Nabiullina told ministers she was cutting the GDP forecast to 3.4 percent from an earlier 3.7 percent, according to a statement.

Her deputy Andrei Klepach said last month Russia's economic growth forecast might be cut but gave no figure. In 2011, the economy grew by 4.3 percent.

Nabiullina said the cut stemmed from a lower projection for investment growth of 6.6 percent, down from an initial 7.8 percent.

The new projection signals a sharper slowdown from the fourth quarter of 2011, when growth hit 4.9 percent partly due to higher state expenditure ahead of December's parliamentary elections.

In the run-up to last month's presidential vote, Russia's GDP grew by 4.8 percent in February year-on-year after rising by 3.9 percent in the previous month.

Earlier this week, the economy ministry raised its forecast for average oil prices in 2012 to $115 per barrel from a previous estimate of $100 per barrel, edging closer to current Urals blend levels of around $123 per barrel.

The government initially envisaged a budget deficit of 1.5 percent of gross domestic product (GDP) in 2012, while Finance Minister Anton Siluanov said this week that the budget could end the year in the black if external conditions stay positive.

Central bank Chairman Sergei Ignatyev said on Thursday that it will be difficult to keep this year's inflation rate in a range of 5-6 percent adding the regulator still sticks to its initial projection.

Nabiullina said on Friday the ministry sees inflation within the 5-6 percent corridor this year.

(Writing by Katya Golubkova; Editing by John Stonestreet)

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