The economy grew in the first three months of 2010 and expansion is likely to continue, although recovery in consumer and investment demand is still fragile, Economic Development Minister Elvira Nabiullina said Wednesday.

Gross domestic product rose a seasonally adjusted 0.2 percent month on month in March and was up 4.9 percent year on year, Nabiullina said, an improvement on the 3.9 percent growth reported in February.

That resulted in a seasonally adjusted expansion of 0.6 percent in the first three months of 2010 quarter on quarter.

High oil prices and improved global demand are helping Russia recover from its deepest contraction in 15 years, and latest data on retail sales and investment suggest that domestic companies and consumers are also starting to spend.

"We expect growth in the second quarter. There are signs of a revival, but it is a bit too soon to talk about stability [of the recovery trend]," Nabiullina said.

"Investment and consumer demand is not yet stable."

With the economy showing signs of improvement and the Central Bank expecting a pickup in inflation later in the year, analysts say a yearlong interest rate cutting cycle may soon be coming to an end.

However, Nabiullina played down the inflation risk, saying the Economy Ministry "does not see factors for the acceleration of inflation" in the second half of 2010.