The Russian economy expanded by 1.3 percent in the first quarter of the year compared to the same period in 2017, the national statistic agency Rosstat said on Wednesday. The growth rate exceeded the government's forecast of 1.1 percent growth. While Russia returned to growth in 2017 after two years of recession, the tepid 1.5 percent expansion fell short of the government's hope of 2.0 percent growth.
It also pales in comparison with the growth figures of more than 7 percent due to soaring oil prices seen during President Vladimir Putin's first two terms in office from 2000 to 2008. Rosstat releases seasonally-adjusted quarterly data, which most economists use to judge whether an economy is growing, at a later date. According to the latest data available, the Russian economy contracted slightly at the end of last year.
Putin, who was reelected in March to a fourth term in office, has set a goal to exceed global growth, forecast by the International Monetary Fund as 3.9 percent this year, and has warned of stagnation caused by lack of reforms. The central bank forecasts the Russian economy will only grow between 1.5 and 2.0 percent annual rate though 2020 unless structural reforms to the economy are undertaken.
The government needs faster growth to push up people's real wages, which have fallen for four consecutive years as the Russian economy reeled from a crash in oil prices in 2014, along with international sanctions imposed over Moscow's actions in Ukraine.
Oil prices, which have recently rebounded to levels last seen in 2014, should provide support for the Russian economy, but acting economy minister Maxim Oreshkin said that his office would be lowering its forecast of 2.1 percent growth this year due to new US sanctions.
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