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Russia sees recovery speed up in second quarter

[MOSCOW] Russia's economy expanded by 2.5 per cent in the second quarter, up from 0.5 per cent in the first quarter, as the country gradually recovers from two years of crisis, the state statistics service said Friday.

The Rosstat statistics service said in a statement that the gross domestic product (GDP) grew 2.5 per cent in the second quarter, compared to the same period last year.

This figure is slightly lower than the government's assessment of 2.7 per cent, but much more positive than most economists had predicted.

Russia's government has set a target for the whole of 2017 of two per cent growth.

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The country's economy at the end of last year emerged from a two-year recession caused by a crash in oil prices and international sanctions imposed over Moscow's actions in Ukraine. The last quarter of 2016 saw 0.3 per cent growth.

Finance Minister Maxim Oreshkin said in late July that GDP rose 2.7 per cent year-on-year in the second quarter of 2017.

He commented that the two-per cent target for the year "seems even a little cautious."

Economists have attributed recent growth to consumer spending picking up after a long slump, while unusually cold weather has boosted energy production.

Russia's central bank trimmed its interest rate by 0.25 percentage points to 9.0 in June, noting that "economic activity is recovering." Central bank chief Elvira Nabiullina in June gave a more conservative prediction for annual growth of up to 1.8 per cent.

In the longer term, economists and the Russian authorities fear that growth will falter unless there are structural reforms to reduce the country's dependence on oil and gas exports.