Russia's economic growth remained robust in the first half of 2008, with major economic indicators beating expectations. The Russian government has raised its economic growth forecast for 2008 to 7.1 percent from 6.7 percent.
Russia's gross domestic product rose 8.3 percent during January-April from the same period last year, according to the Federal State Statistics Service (Rosstat).
The increase in GDP is mostly spurred by strong investment and consumer spending. In the first four months, the domestic fixed investment increased 20.3 percent year-on-year and retail sales saw a rise of 15.6 percent.
One bright spot of the economic growth is the sharp rise in foreign trade, which grew 48.4 percent during the January-April period from a year earlier to 235.2 billion U.S. dollars, with exports rising 51.8 percent to 150.3 billion dollars and imports up 42.8 percent to 84.9 billion dollars.
The structure of foreign trade is similar to that in the past. During the four months, exports of energy jumped 65.7 percent to 102.902 billion dollars, while imports of machinery and vehicles grew 63.8 percent to 41.264 billion dollars.
The national projects, the basic components of which are agriculture, healthcare, education and housing, were carried out comprehensively in the first half. The Kremlin has set forth a long-term development goal to transform its natural resource-dependent economy to an innovative one led by high-tech sectors.
Russia has become one of the largest economies in the world, and will be the world's sixth largest economy by the end of 2008, Russian First Deputy Prime Minister Igor Shuvalov said at the 12th St. Petersburg International Economic Forum in June.
Russian Economic Development Minister Elvira Nabiullina said Russia's foreign exchange and gold reserves have exceeded 500 billion dollars, and the foreign direct investment is expected to grow 33.3 percent year-on-year in 2008.
Despite the fact that the Russian economy expanded energetically, inflation in Russia surged to 8.1 percent in early June. Both Russian President Dmitry Medvedev and Prime Minister Vladimir Putin have made fighting inflation a top priority.
The Russian Central Bank raised key interest rate moderately in February and April in an effort to keep down the inflation.
The government has raised its 2008 inflation forecast to 9-10. 5 percent from the initial projection of 7-8.5 percent. First Deputy President of the Central Bank Gennady Melikyan said the country's inflation rate is likely to reach 12 percent this year. The International Monetary Fund (IMF) predicted that Russia's inflation rate will hit 14 percent in 2008.
Russian Deputy Prime Minister and Finance Minister Alexei Kudrin said that the government would take a series of measures, including establishment of inflation target mechanism, to bring the inflation rate down to 6 percent before 2011.
However, Russia may run the risk of an overheating economy, and challenges like the reform of economic structure and the widening income gap need to be tackled, analysts here said. Administrators of the government and enterprises must adapt their ideas to market economy as well.
Source: Xinhua
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