"It is our belief that growth in the fourth quarter will be better than in the third," Andrei Klepach, director of the ministry's macroeconomic forecasting board, said today.
According to the ministry, the average monthly growth both for GDP and industrial production will be 0.6% in the fourth quarter.
In January-October 2004, GDP increased by 6.7%. The ministry forecasts that inflation in November will be at least 1%.
"Inflation this November will be the same as last November or higher," Mr. Klepach said. He added that price growth last November stood at 1%.
According to the ministry spokesman, there was a 5% year-on-year increase in GDP in October 2004.
"Inflation is exceeding [our] targeted levels," the official said. It was not expected to be higher than 10%, but reached 9.3% for the first nine months of the year.
Mr. Klepach believes higher prices for gasoline, and meat and dairy products are more responsible for this rather than gains made by the ruble.
"The real effective rate of the ruble fell by 0.4% in October," Mr. Klepach said.
According to him, this was due to euro gains against the dollar, while the real effective rate of the ruble in January-October was 4.9%.
The Central Bank has met its targets this year, Mr. Klepach believes, and the gains in the real effective ruble rate will be a little over 5%.
The Central Bank planned the ruble would not strengthen more than 7% by the end of the year.
Citing preliminary figures, Mr. Klepach said that Russia exported goods worth $146.2 billion in January-October and imported items worth $74.8 billion.
"Growth rates for exports are high but slowing down," Mr. Klepach said.
He noted that imports were growing faster and their dynamics were gradually approaching exports.
In Russia, investment growth in fixed capital was 11.2% in the first ten months of 2004.
In October 2004, investments grew by 7.8% as against the same period last year. "The investment growth rate is slowing down," Mr. Klepach said. "Proceeding from the current dynamics, we cannot achieve the planned annual index of 1.5%."
In relation to September, investment in fixed assets in October increased by only 0.2 % with account for the seasonal factor. Mr. Klepach explained the lower rate of investment not so much by last year's high indices as by declining investment in oil production.
At the same time, he did not rule out that the negative trend in falling investment in oil production might continue. In his opinion, this is unrelated to the tax checks of oil companies but rather existing problems with oil transportation. Companies may be cutting back on production because they do not know how oil transport problems can be solved, he explained.
In his opinion, the tax burden in general may also affect companies' plans to increase production. "This question has to be thoroughly discussed and the tax burden may have to be corrected," Mr. Klepach said.
