Macroeconomic Forecast Russia

Russian industrial production growth has spiked to the upside in Q110, averaging an expansion of 22.7% y-o-y through the quarter. While statistical base effects resulting from the sharp contractions over the same period in 2009 played a role in lifting the growth rate, the nominal level of output has also surged to a record high. The bounce back in the industrial sector bodes well for the rest of the economy, reinforcing our view for a strong recovery in headline real GDP growth in 2010. To be sure, with oil above US$75.00/bbl, the outlook for the crucial energy sector is looking very positive and we expect oil and gas to continue underpinning economic growth through the medium term.

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