UPDATE: Econ min: Russia’s GDP growth may exceed 2% in Jul–Dec

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HANOI, May 22 (PRIME) -- Russia’s gross domestic product (GDP) growth may exceed 2% on the year in July–December, Economic Development Minister Maxim Oreshkin told reporters on Monday.

Russia’s GDP grew 0.5% on the year in January–March, according to data of the statistic service. Adjusted for calendar factors, the growth amounted to 0.9–1.0%, according to Oreshkin.

“The base effect is good. We expect that growth rates will be stronger every next quarter…The second half of the year will be more than 2%. But we should understand that the fourth quarter is “weighing” much higher than the first quarter,” the minister said.

The ministry has not changed its forecast for 2017 and expects a 2% growth for the entire year, he also said. “The first quarter gives grounds to expect a 2% growth for 2017. Our forecast doesn’t change and we see no reasons to change it.”

The budget deficit may amount to less than 2% of GDP in 2017 if an OPEC and non-OPEC oil output cut agreement is prolonged, Oreshkin said.

He also added that the ministry may adjust its macroeconomic forecast in June, including on inflation, the ruble rate and oil price, if the agreement is extended.

“(Prolongation of the agreement) would mean a higher average annual price for oil in forecast terms. In this respect, we already have figures higher than in our current forecast. It would be a stronger ruble… and inflation lower than the basic scenario of 3.8%,” the minister said.

Oreshkin also said that the prolongation of the oil cuts agreement will allow Russia’s central bank to reduce its key interest rate more aggressively.

OPEC states agreed to reduce their oil production by 1.2 million barrels daily to 32.5 million barrels in November 2016. Russia joined the agreement in December with a promise to cut output by 300,000 barrels daily compared with the level of October 2016. The agreement was concluded for January–June 2017 with potential prolongation.

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