IMF predicts Russian economy to grow 6.5 pct in 2006, 2007

The Russian economy will grow by 6.5 percent both this year and next, the International Monetary Fund predicted Monday in an annual report.

The international financial institution also forecast that Russian consumer price inflation would fell to 9.7 percent this year and 8.6 percent next year after having rocketed to double- digit figures in recent years.

But that would still be above government targets.

High oil prices and generally prudent macroeconomic policies have helped the Russian economy, said the Fund.

However, those policies are now at risk from a "noticeable fiscal relaxation", the Fund warned, noting that the country had stopped saving its oil windfall and was now spending the money on tax cuts and higher expenditures.

As a result, Russia's non-oil primary deficit is on course to mushroom by nearly three percent of GDP over 2005-2006, the Fund said. "The draft 2007 budget entails a significant further easing. "

Meanwhile, the Fund lent support to Russia's bid to join the World Trade Organization, which is now held up by protracted bilateral talks with the United States.

Source: Xinhua