On Russia’s GDP dynamics in 2011

According to Rosstat, in the first half-year of 2011, the index of Russia's physical volume of GDP amounted to 103.7, while the rate of growth slumped from 105 % in Q1 to 103.4 % in Q2 comparison with the corresponding periods of 2010.
In spite of some acceleration of the growth rate of investment in capital assets and that of retail trade turnover in Q2 2011 on the corresponding period of the previous year, the impact of these factors has turned out to be insufficient to compensate for the slackening of industrial production dynamics. The goods and services output index by basic type of economic activities for January – July 2011 amounted to 104.2 against 106.5 for the corresponding period of 2010.

The extremely unstable dynamics of investment observed over the year indicates that the factors that initially emerged in late 2008 – first half of 2009 – that is, during the acute phase of the crisis – have so far retained their influence. In July 2011, a drop in the demand for labor was registered in industry, construction and agriculture, which resulted in the resumption of growth in unemployment: the level of unemployment rose from 6.1 % of the economically active population in June to 6.5 % in July; the number of unemployed climbed to 5 million.

In view of this situation, in August 2011 the RF Ministry of Economic Development downgraded its 2011 forecast for GDP growth from 4.2 % to 4.1 %, and narrowed its forecast for 2011 inflation to 6.5 – 7 %. In response to the worsening of Russia’s economic indicators for Q2 2011 and the influence of the external situation on Russian domestic demand, the World Bank followed suit and also downgraded its 2011 forecast for Russia’s real GDP growth from 4.4 % to 4.0%.

O. I. Izriadnova
– Head of the Structural Policy Department