Russian Economy Grew 4.5% in Fourth Quarter, Less Than Economists Forecast

Russia’s economic growth accelerated in the fourth quarter as commodity prices rose and companies boosted investment to meet rising domestic demand.

Gross domestic product rose an annual 4.5 percent compared with a revised 3.1 percent in the previous three months, the Federal Statistics Service in Moscow said today in an e-mailed statement. The median estimate in a Bloomberg survey of 14 economists was for 4.8 percent.

President Dmitry Medvedev set a growth target of 10 percent within five years to pull the world’s biggest energy supplier into line with emerging-market peers in China, Brazil and India. The economy lost momentum in the third quarter after the worst drought in at least half a century slowed expansion by as much as 0.8 percentage point, according to the Economy Ministry.

“I still think we can say this is a pretty lackluster recovery, particularly by historic standards,” Neil Shearing, senior emerging-market analyst at Capital Economics in London, said by phone. “There’s mounting evidence that real wage growth has started to slow and that’s feeding into slow retail sales.”

Russia’s growth continued to lag among the so-called BRIC economies. China’s economy grew 10.3 percent in the fourth quarter, followed by Indian GDP growth of 8.2 percent and Brazil’s rise of 5 percent.
Manufacturing Rise

Manufacturing rose an annual 13 percent in the fourth quarter, while construction jumped 6.1 percent after declines in the previous three quarters, the service said. Agricultural output shrank 7.1 percent from the same period last year.

Companies including United Co. Rusal, the world’s largest aluminum producer, and OAO TMK, Russia’s largest producer of steel pipes, increased profit last year after sales gained and prices for their goods rose.

New car sales rose an average 67 percent in the fourth quarter, benefitting OAO AvtoVAZ (AVAZ), Russia’s largest automaker.

The ruble-denominated Micex Index (INDEXCF) of 30 stocks added to gains after the data release and was 1.6 percent higher at 1841.62 at 6:11 p.m. in Moscow. The ruble strengthened 0.1 percent against the dollar to 28.4050 by the 5 p.m. close of trading in the capital. The Russian currency was 0.6 percent stronger against the euro at 40.0650.
Year-End Rush

Industrial output unexpectedly eased in February and fixed- capital investment shrank during the first two months of the year after 10 consecutive monthly gains.

Real disposable incomes fell an annual 1.5 percent in February after a 5.8 percent drop in January. Unemployment was 7.6 percent in February, almost the highest level in 10 months.

“Construction activity and investment” may have peaked as companies “rushed to close their projects by the end of last year,” Natalia Orlova, chief economist at Alfa Bank in Moscow, said by telephone before the release. “Overall, the business mood is more complicated this year as opposed to the fourth quarter” after the government raised payroll taxes from Jan. 1.

GDP grew 4 percent last year, the statistics service said, reiterating its first reading. Second-quarter growth was revised down to 5 percent and expansion in the first quarter was upgraded to 3.5 percent, the service said.