Russia's GDP growth in 3Q-4Q 2018 is unlikely to exceed 1.9% — minister


Russia’s Economic Development Minister Maxim Oreshkin doubts that Russia's GDP growth in the third and fourth quarters of 2018 will exceed 1.9%.

"We expect a slowdown in the first quarter of next year, indeed. But we do not expect any big positive surprises in the third and fourth quarters of this year. That is because of higher uncertainty, the growth of volatility on the financial markets... This is not the right background for acceleration of growth," the minister told reporters on the sidelines of the Eastern Economic Forum.

"It is unlikely to be above 1.9% [GDP growth in the third and fourth quarters - TASS]," he added.

According to the minister, the most serious slowdown in the Russian economy is expected in the first quarter of 2019, when the GDP growth may be below 1%, Oreshkin said.

According to the Federal Statistics Service (Rosstat), in the first half of the year, Russia's GDP grew by 1.7% (against the previous estimate of 1.6%), in the second quarter it grew by 1.9% (against the previous estimate of 1.8%).

The minister also said that keeping the ruble rate at the current level will accelerate inflation in 2018 bringing it above projected 3.4%.

"The annual estimate will strongly depend on the dynamics of the exchange rate. Keeping it at a level close to the current one will mean that inflation will be above 3.4% that we have in the forecast. On the contrary - fast changes on the currency market will mean that we can reach 3.4%," Oreshkin said.

He noted that the ruble now deviated significantly from the fundamental values, but by the end of the year the exchange rate will be 63-64 rubles per dollar.

"No we see a deviation from the fundamental rate now: how long can it last? It can last for a fairly long period of time. We have a floating rate. Volatility of capital flows is linked with the global situation, with the sanctions. We have a forecast for the end of this year, and also for the next 12 months, but we do not see reasons to change these figures yet," the minister said.

At the beginning of the week, the euro and the dollar renewed their highs since March 2016 - the dollar exceeded 70 rubles, the euro exceeded 81 rubles.


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