#11 - JRL 7240
Russia PM and economy minister at odds over growth
By Larisa Sayenko
MOSCOW, June 25 (Reuters) - Russian Prime Minister Mikhail Kasyanov, under Kremlin pressure to double the size of the economy in a decade, predicted faster than expected 2003 growth on Wednesday, putting himself at odds with a key ministry.
"I think today I can make a braver forecast than the one I did two weeks ago. Most likely, the economy will grow about 5.5 percent this year," Kasyanov told the Federation Council upper chamber of parliament.
Kasyanov has gradually upgraded his growth forecast after President Vladimir Putin set as a prime task in May the doubling in size of Russia's economy within 10 years. The prime minister had predicted five percent growth earlier this month.
Kasyanov's remarks ran directly counter to the more cautious Economy Ministry, which said earlier in the day it was reverting to conservative estimates of 4.5 percent growth.
A ministry statement said it would review its forecast only after data for the first six months became available.
The ministry had predicted on Monday that growth could hit 5.4 percent after recording a 7.1 percent figure in the first five months of the year.
Economists dismissed the ministry's move as a publicity stunt ahead of December elections to the State Duma lower house of parliament and presidential polls next year.
"Given that the Duma elections are in December it makes more sense for the government to claim late in the autumn that its policies have been unexpectedly successful than to find itself apologising for a failure to meet its forecast," said Christopher Granville, a chief strategist at United Financial Group.
Russia, the world's second largest crude oil exporter, had been initially aiming for 3.5-4.4 percent GDP growth in 2003, depending on global crude prices, but officials raised their forecast to 4.5 percent after a strong start to the year.
Forecasts by economists range from 4.5 percent to almost seven percent thanks to strong global crude and commodities prices, mounting investment and robust domestic demand. The economy grew 4.3 percent last year.
"In our view, the 5.4 percent forecast looked too conservative. It applies even more to this (4.5 percent GDP growth) forecast," said UFG's Granville.
Peter Westin, a senior economist at Aton Capital, agreed: "I would not be surprised if they come out with the same 5.4 percent or even higher in a month or so."
Kasyanov said that according to preliminary estimates the economy grew about seven percent in the first half of the year.
"The positive tendency of rising domestic consumption is proportional to productivity growth. New centres of growth have emerged such as the construction sector, which saw an investment boom," Kasyanov said.
More cautious analysts say a decline in global crude prices as well as lack of structural reform may drag on economy growth rates in the second half of the year. The International Monetary Fund (IMF) has forecast growth of four percent.