Russian output expands

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Alexei Ulyukayev1 Reuters. Russian Economy Minister Alexei Ulyukayev.

Moscow - Russia's economy minister said Monday that output expanded by 1.2 percent in the second quarter compared to the same period last year, a preliminary figure that is “slightly better” than expected despite the Ukraine crisis.

“The results are slightly better than we predicted, with the emphasis on 'slightly',” economy minister Alexei Ulyukayev said.

He added that the “refined” official figure by Russia's statistics agency will be released later.

The IMF said last month that Russia is already in recession, while the central bank said growth in 2014 is likely to slow to just 0.4 percent.

Ulyukayev said that second quarter figure, up from 0.9 percent in the first quarter and 0.2 percent better than his ministry's expectations, was likely bolstered by industrial growth.

“This year industry is becoming the main locomotive of growth,” Ulyukayev told President Vladimir Putin in a meeting, citing industrial growth reaching 2.5 percent, up from 1.8 percent in the first quarter.

The Russian economy has suffered amid the crisis in Ukraine as constant threat of Western sanctions over Moscow's annexation of Crimea and its involvement in the rebellion in eastern Ukraine accelerated capital flight and the fall of the ruble.

However Ulyukayev noted that a weak ruble has so far been a boon for exporters, and that the country's drive to reduce imports by boosting domestic production has already seen results.

“Our exports improved in metals, fertilisers...domestically there are less imports, import replacement has begun,” he said.

Moody's cut Russia's credit rating late last month, and Ulyukayev then predicted that deeper economic sanctions on key exports such as energy mooted by the EU will push the economy into recession. - Sapa-AFP

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