GDP Indicator: Russian growth slows to 30-month low in Jan

GDP Indicator: Russian growth slows to 30-month low in Jan
Source: prime-tass.com
Publication date: 2/11/2008

Russian economic growth slowed to a 30-month low of 6.1% in January, reflecting weaker expansion in services, London-based VTB Bank Europe said in its latest GDP Indicator report released Wednesday.

The figure indicated the weakest rate of economic expansion in Russia since July 2005, VTB Bank Europe said.

The indicator slowed in January from the 6.3% rate registered throughout October-December of last year, the bank said. The Russian economy grew at an annual rate of 6.4% in July-September of last year, according to the bank's earlier GDP Indicator reports.

“The Russian GDP Indicator in January eased back to an estimated annual growth rate of 6.1%,” said Chris Green, senior economist at VTB Bank Europe Research, commenting on the survey. “Underpinning this softening growth profile has been a weakening in the rate of growth in the services sector, although this was somewhat offset by a rise in manufacturing sector activity over the month.”

Despite strong GDP growth in 2007, Green projected the growth rate to slow this year.

“While preliminary official estimates suggest robust GDP growth of around 8.1% in 2007, the latest Russian GDP Indicator survey suggests that the rate of expansion will ease over 2008,” he said.

The survey's seasonally adjusted all-industry index slid to 55.4 in January from 56.9 in December, the weakest combined growth of manufacturing and services sector output in Russia since December 2004, the bank said. A reading above 50 indicates expansion in the economy, while a reading below 50 shows contraction.

The GDP Indicator is derived from VTB Bank Europe's Purchasing Managers Indices (PMI), which are surveys of business conditions in the manufacturing and service sectors of Russia. By weighing together the output measures from these surveys, an indicator of total output is produced.

U.K.-registered VTB Bank Europe, formerly known as the Moscow Narodny Bank, is a subsidiary of Russia's second largest bank, state-controlled VTB Bank.