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    Russia's trade surplus drops 13.8% to $63.8 bln in 1H07-1

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    (Adds details, inflation info and forecasts in paras 3-13)

    MOSCOW, July 30 (RIA Novosti) - Russia's trade surplus in the first six months of 2007 dropped 13.8%, year-on-year, to $63.8 billion, the Russian economics ministry said in a monitoring report Monday.

    The ministry said Russian exports stood at $160.5 billion in January-June 2007, up 11.6% against the same period last year, while imports increased 38.5% to $96.7 billion in the same period.

    "In general, 60.6% of the export growth in January-May 2007 resulted from a price hike and [the other] 39.4% was brought about by an increase in the actual volume," the report reads.

    The share of non-Commonwealth of Independent States (CIS) countries in Russian exports fell from 86.3% to 84.8%, with the CIS share increasing from 13.7% to 15.2%. The export of almost all goods, except fuel and energy, went up in January-May 2007.

    Import growth was caused by higher consumer demand, investment growth and ruble strengthening, the report reads. Non-CIS countries accounted for 85% for Russian imports, and the CIS share was 15%.

    The greatest import growth in the reporting period was for machinery, equipment, cars, metals, textiles and footwear.

    Russia's economics ministry also said it still hoped to keep the country's inflation no higher than its 8% target for 2007.

    However, some independent experts predict that inflation could exceed the 2007 target and reach 8.5%.

    Consumer prices increased 5.7% in the first half of the year, and the ministry said inflation would be 2.2-2.5% in the second half, or 0.2-0.4% lower that in the same period last year.

    Inflation in July has been forecast at 0.8%-1% in July, against 0.7% in July 2006. The economics ministry said it expected inflation in the first half of 2007 to stand at 6.6%-6.8%.

    The ministry said inflation in the latter half of 2007 could slow down owing to a season drop in prices for fruit and vegetables and "an expected reduction of money supply" following an influx of capital into the country.

    Finance Minister Alexei Kudrin said Saturday net capital outflow stood at $6-$8 billion in Russia in the first 10 days of June.

    However, the economics ministry warned of inflation risks due to higher prices for grain and a potential price hike for meat, fuel and lubricants.

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