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Last Updated: Thursday, 19 April 2007, 12:28 GMT 13:28 UK
Russia's economy 'picks up pace'
Workers lay a gas pipeline near Boksitogorsk
Russia's oil and gas sector is still the main driver of economic growth
Russia's economy has accelerated during the first three months of this year, the country's Economic Development and Trade Minister German Gref has claimed.

Mr Gref estimated that the economy expanded at an annual rate of 7.9% in the first quarter of 2007, up from 7.7% in the previous three-month period.

Strong demand, and high prices, for oil and gas have been drivers of growth.

However, other parts of the economy were not performing as well and may present future problems, analysts said.

"There is still a lot of momentum in the Russian economy but it shouldn't be overestimated," said Gianella Christian, an economist at the Paris-based Organisation for Economic Co-operation and Development (OECD).

He warned that once you discounted the effect of oil and gas exports, then Russia was growing more slowly than some of its neighbours, such as Kazakhstan.

Production

Even so, Russia's mineral-rich economy has still been showing signs of strength.

According to the Federal State Statistics Service, industrial production also rose sharply in March, up 7.9% year-on-year - beating market expectations of 5.6%.

Manufacturing output was 14.5% higher at an annual rate for the first quarter of 2007, steered by food processing, construction materials, and transport and power machine-building.

There also has been an improvement and a positive trend in investment levels, analysts said.

"The main feature of the first quarter is a new wave of economic growth acceleration," said Minister Gref.

Russia's economic performance has helped underpin its currency, and analysts said that while the rouble has appreciated, its strength to date has not proved a major obstacle to the competitiveness of domestic manufacturers.

President Vladimir Putin wants the government to press the central bank to intervene more strenuously in the foreign currency market should it appear that the rouble is strengthening faster than Russian industry can cope.


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