Russia drops pace in GDP and industrial output increase

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MOSCOW, June 15 (RIA Novosti) - Russia's gross domestic product increase rate for last January through April was 5.3 per cent, says a social and economic development forecast for 2006-08, to be offered to the federal Cabinet at its session tomorrow.

"The rate is below that of the same months in 2004-it was 7.3 per cent," an informed government source said to RIA Novosti.

Industrial output increase also dropped pace: 4.2 per cent for this year's initial four months, as against 6.9 per cent of the same months last year, say statistics offered by the Ministry of Economic Development and Trade.

As our informant has it, progress has slowed down mainly due to a decrease of capital investment activity and export increase rate. The latter point specially concerns petroleum exports, he said.

Nevertheless, he expects overall economic progress, industrial output included, to regain pace in the second half-year. The Ministry of Economic Development and Trade forecasts a 5.8 per cent GDP increase for this entire year.

The ministry prognosis to be offered to the Cabinet promises a 5.6 per cent GDP increase for 2006, 5.8 per cent for 2007, and 6 per cent for 2008.

These rates are far from enough to double the gross domestic product within ten years-a national goal posed by the federal President, said our informant.

He highlighted the consumer price index rising by 7.3 per cent, last January through May.

"Housing rents and utilities fees are going up. Foodstuff and fuel prices are also growing apace. Thus, fuel prices resumed their growth last March. Those are the basic inflation factors," said our interviewee.

Despite all that, the Ministry of Economic Development and Trade does not think the inflation rate for this year will cross the 10 per cent barrier, while the Central Bank of Russia forecasts it within a 8.5-10 per cent corridor.

Our informant deems it necessary for the government to stabilize housing rents and utilities fees, and prevent gasoline price increase if this year's inflation is to be kept below 10 per cent.

Meanwhile, the Economic Development and Trade Ministry has not to this day determined practical patterns of curbing fuel prices, housing rents and utilities fees, though it is to offer a report on those issues tomorrow, our source pointed out.

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