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Russia's growth slows drastically in 1st quarter

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(Globalpost/GlobalPost)

Russia on Wednesday reported a sharp slowdown in growth over the first three months of the year to 1.1 percent from 4.9 percent in the same period of 2012.

Deputy Economy Minister Andrei Klepach said the estimate came in after downward revisions for the figures for January and February -- a month in which the economy contracted by 0.4 percent.

But he added that a stronger March helped Russia's overall performance in the first quarter.

"By our estimate, GDP grew in March by 2.3 percent in annual terms, and we confirm our estimate of 1.1 percent for the first quarter," the RIA Novosti news agency quoted Klepach as saying.

The estimate was released a week after Russia slashed its 2013 growth forecast to 2.4 from 3.6 percent due to a slowdown in both industrial output and consumer demand.

Klepach spoke at the same time as Prime Minister Dmitry Medvedev was delivering an economic performance review before the lower house of parliament.

Medvedev told deputies that Russia's slowdown was caused in large part by poor economic performance among its main trading partners abroad.

"The first months of the year show that the global trend toward slower growth remains in place," Medvedev said in a speech lasting nearly two hours.

"There are serious risks here."

President Vladimir Putin -- whose strong popularity ratings come from the prosperity brought by years of high prices for Russia's energy exports -- himself admitted on Monday that the world economy was in "crisis".

He then instructed Medvedev to quickly assemble a meeting of ministers and Kremlin officials that could devise a strategy for pulling the country out of its economic malaise.

Medvedev said Wednesday that the government already had a proper strategy in place.

"The government has its own vision of what must be done," he said. "But these measures must be discussed in detail with the experts and the deputies."

Economists also called Russia's economic performance worrying.

"With growth easing in most trading partners, the fact that Russia has slowed is not surprising. But the magnitude of the slowdown is becoming increasingly worrying," the London-based Capital Economics consultancy said in a research note.

It also noted that the slowdown actually began in the second half of last year after impressive growth figures for the first six months of more than four percent.

"Russia's slowdown at the end of last year was driven by a combination of a slump in investment, a deceleration in consumer spending growth and the end of the inventory restocking cycle," it noted.

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http://www.globalpost.com/dispatch/news/afp/130417/russias-growth-slows-drastically-1st-quarter-0