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Government Raises its GDP Growth Estimates

The Economic Development Ministry has raised its gross domestic product growth forecasts for this year and next, thanks to a more upbeat outlook for key export oil, Deputy Minister Andrei Klepach said Thursday.

GDP growth estimates for this year have been revised to 4 percent from 3.1 percent and, for 2011, to 3.5 percent from 3.4 percent, Klepach told reporters.

The widely expected revision brings the official forecast broadly in line with that of analysts and the International Monetary Fund, as well as with recent comments from officials.

"The global recovery will gather strength. Within [Russia] we also see fairly sturdy growth, both from investment and from consumers," Klepach said. Russia's Urals oil is seen averaging $76 a barrel this year and next, compared with about $84 now and a previous forecast of $65 this year and $70 for 2011, he said.

Higher oil prices have been the key driver of Russia's recovery from its deepest contraction in 15 years in 2009, but the latest data suggest that the domestic economy is also improving.

Oil has also helped fuel a rally in the ruble. Klepach also said the Economic Development Ministry sees the ruble's real effective exchange rate rising 11.9 percent this year and appreciation slowing to 4.7 percent in 2011.

"11.9 percent is a very big appreciation, we have already passed the pre-crisis level. But the pace of appreciation is nonetheless a bit lower than we expected in December," he said.

In the first quarter, the real effective exchange rate rose 7.3 percent, Central Bank data shows.

The new forecasts will be discussed by the government next month and may lead to revisions in the budget.

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