Updated April 15, 2008

   According to the Federal State Statistics Service (Rosstat) data, GDP growth totaled 9,5% in 4Q of 2007, and in 2007 on the whole – 8,1%. Analysts doubt the Rosstat takes into account the price rise properly, supposing that therefore the Russian indices of economy growth can be overestimated. However, they are sure that growth continues as the food inflation can unexpectedly become the new source of agriculture growth.

   According to the published Rosstat estimation, in 2007 the Russian Federation GDP totaled RUR 32,987 trillion. Real GDP has upped by 8,1% in 2007, and nominal – by 22,7%. Thus, Rosstat confirmed the estimations that had been made at the end of January. Moreover, in 4Q of 2007 GDP has upped by the record 9,5% previous years. This estimation has been expected, but has been published for the first time. GDP has been growing quickly in such industries as construction (16,4%) and trade (12,9%) foremost, and slowly – in the mining industry (0,3%), and in the industry of "production and distribution of energy, gas and water" it has even reduced by 1,9%.

   Such high indices of the real GDP growth can be obviously predetermined by the relatively low inflation Rosstat states in its calculations. The so-called index of GDP deflator (the measure of the change in prices) equaled 113,5% in 2007. It is not so much taking into account the consumer prices’ growth by 11,9%, and producers’ prices – by 25,1%. Some economists consent that deflator increase would reduce the estimation of the real GDP growth automatically. "Deflator is small and underestimated and it has been counted up wrong judging by the indirect indicators", asserts Vladimir Salnikov from Center for Macroeconomic Analysis and Short-term Forecasting. Deflator size confuses also Tatyana Orlova from ING Russia. However, not all analysts consider it correct to challenge Rosstat estimations. Ekaterina Malofeeva from Renaissance Capital explains "The producers’ prices have been upping only in the 4Q of 2007".

   However, regardless of what exactly GDP growth has been equaled in 2007, the economy continues to grow in Russia. Just its model changes gradually. The most notable change of the previous years is a net export decline, since in 2000 it attained 20% GDP, and in 2007 it was 8,7% GDP. But the final consumption (in 2007 only due to the state sector), as well as gross capital formation, grows.

   From the industrial structure viewpoint, stands out the lesser dependence of the economy growth on a raw material sector, underlines Yaroslav Lisovolik from Deutsche Bank. He pays attention to rapid growth of production in construction and processing industries within primary industries stagnation. And according to his opinion, the growth in the services sector can slow down in the nearest future. And the world financial crisis will affect the growth rates of the bank sector, whether or no, as well as the trade over the growth slowdown of the consumer lending.

   There is another forecast concerning agriculture. It can become the perfect growth factor of the Russian economy. Previous years GDP growth rates in the agricultural sector have rarely exceeded 3%, and the industry itself has produced around 4% GDP only. On the other hand the investments growth rates into this sector have significantly exceeded the average economic volumes – 42,5% in 2006, and 26% in 2007. Yaroslav Lisovolik describes such chain: price rise for food and price rise in the food industry stimulate investments into the agricultural sector, and they provide demand for the engineering products. Tatyana Orlova has the similar viewpoint. "The price rise for food is a serious support the industry could recover, as well as the related sectors such as fertilizers and engineering".

   However, other economists are less confident about this hypothesis. Vladimir Salnikov calls the prospects of agriculture growth "rather moderate", and sees "a lot of risks and limitations" such as complication of export increase and uncertainties with development of agriculture technologies. He considers that other industries such as energy and transport engineering, chemistry and car assembly have a potential for growth rates development in a med-term prospect. Eaterina Malofeeva supposes: "Agricultural business is a long cycle, and long money, as well as permanent demand, is needed. The world prices rise affects much less in terms of adjustment and freeze of prices for food". Otherwise, the governmental attempts to restrain inflation by administrative measures can limit the growth.