Russia GDP Growth at 8.5% in Q1

Russia's economy expanded an annual 8.5 percent in the first quarter, higher than previously estimated, as consumer demand fueled a continuing investment boom.

The expansion followed 9.5 percent growth in the previous three months.

Russian industrial output grew an annual 9.2 percent in April, the most in 9 months, as output of trucks, cars and construction materials surged.

Russia's economy, which is boosted enormously by commodities exports - is largely being driven by wage growth, investment and consumer spending at the present time and this is raising questions about distrortions and sustainability in the longer term. The rapid expansion is also fuelling inflation, which accelerated to 15.1 percent in May, and may be a signal that the economy is overheating.

Real wage growth has advanced more than 12 percent every month this year, increasing demand for housing and consumer goods. The government expects the economy, the world's 10th biggest, to expand 7.6 percent this year after growing 8.1 percent in 2007.

Demand from companies and consumers spurred import growth of 53 percent in the first quarter, compared with the same period in 2007, according to the Federal Customs Service. Russia's construction sector expanded 28.3 percent in the first quarter, the statistics service said, compared with 28.1 percent in the same period last year.

Russia GDP Growth at 8.5% in Q1, Bloomberg
8/25/2008 8:29:34 AM