The direction of travel tallied with data from February, which showed gross domestic product contracted by a less than expected 0.2 percent in 2016, a revision which prompted economists to conclude that the economy had returned to growth late last year after seven quarters of contraction.

Friday's data, from Russia's statistics service, proves those conclusions were accurate and will bolster hopes among Russian officials for a bigger rebound in growth this year.

"We expect the slump in consumer spending to ease further, and the recovery in investment to continue, pushing growth higher," William Jackson, at Capital Economics, said in a note.

Jackson said the better fourth-quarter performance, which came after a 0.4 percent year-on-year contraction in July-September 2016, was driven by stronger inventory investment and a shallower fall in consumer spending.

Economists polled by Reuters predict the Russian economy could grow by 1.2 percent this year, while Russia's economy minister has said he hopes for growth of 2 percent.

Despite the improved outlook, industrial output and retail sales were still contracting in February, the latest month for which data is available.