Actuality February 22, 2008<

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Federal State Statistics Service (Rosstat) summed up the preliminary results of January, 2008. The polled economists, as well as information of state agency, confirm the continuing investment and consumer boom

in Russia, even in spite of situation worsening in the world economy. Economists explain some deceleration of retail business turnover by the prolonged holidays.

Rosstat data about the state of affairs in the Russian economy in January, 2008 confirmed expectations of economists. In January, 2008 as compared to January, 2007 the volume of investments in the fixed capital has increased by 19% and totaled RUR 354,9 bln. The consensus-forecast Interfax agency – 18%. We will remind, the record growth of investments was registered on January, 2007 – by 26,9% (for 2007 – by 21,1%). Industrial production grew by 4,8% in January, 2008 as compared to

January, 2007, and continued the positive tendency of the last months of 2007.

"Taking into account that the global economy is depressed, the January data says that this depression did not affect Russia yet. We forecast that according to the results of 2008 investments, mainly due to state investments, will grow by 20% (consensus-forecast – 17%)", marks Tatyana Orlova from ING Russia.

Elena Abramova from Center for Macroeconomic Analysis and Short-term Forecasting consents: "Beginning of the year by

the trend was marked with very high growth. Usually, in January there is a slump even by trend". According to her calculations, even "with removed seasonality", investment grew by 0,7%. In January, 2007 their growth, not taking into account seasonal fluctuations, totaled 3%, but, as the economist underlines, "it is a very strange surge, because before January there were only negative indices".

But high growth rates in January show not only investments. Real disposed money incomes of population grew by 12,9% in January, 2008 as compared to January, 2007, and nominal ones – by 28,5% and totaled RUR 10 641.

The real salary increased by 15,8% in January.

High e arnings growth continues to support

a consumer boom.

The retail business turnover grew by 14,1% up RUR 911,6 bln in January, 2008. C onsumer preferences change

on the background of earnings growth. In the structure of retail business turnover the share of food commodities totaled 45,1% in January, 2008 against 45,4% in January, 2007, nonfood commodities – 54,9% against 54,6% in January, 2007. The polled economists mark some deceleration of growth rates of retail commodity turnover due to reduction of consumption of food commodities, but explain it by holidays exceptionally.

"Households, as it seems, stored up on products", Elena Abramova considers.

Judging by January, the main factors on which the economy growth relied the last two years are still valid, and there are no grounds for the change of tendencies in the nearest prospect.

The deputy head of the Ministry of Economic Development and Trade Andrey Belousov reported that by the estimations of the ministry the growth of the Russian GDP totaled 7,4% in January, 2008. "It is a good index, taking into account that in January of the last year there was warmer weather and higher basis", he marked.