Output grew 4.7 percent, compared with 3.2 percent in July and 0.9 percent in June, the service said. The median forecast of 16 economists was for 5 percent. Growth fell 0.9 percent on the month.
"Cheap credit from abroad was one of biggest factors behind industrial output and economic growth at large," UralSib chief economist Vladimir Tikhomirov said. "This, obviously, has stopped."
Tightening access to credit and mounting stock market losses are making it more expensive for companies to borrow and refinance existing debt, crimping their ability to invest and expand. Russian banks must refinance about $45 billion of debt, Standard & Poor's said Monday, and the cost of borrowing for companies has risen 2 or 3 percent, brokerage Troika Dialog estimates.
Turmoil in world markets has helped create a "severe shortage of liquidity in the banking system," Alexander Shokhin, president of the Russian Union of Industrialists and Entrepreneurs, told President Dmitry Medvedev at a Kremlin meeting Monday.
The country's economy grew 7.5 percent in the second quarter, compared with 8.5 percent in the previous three-month period, the statistics service said Sept. 10.
Eastern Europe's economic outlook is deteriorating because of spillover problems from the global slowdown and high inflation, with average growth in the region set to slow to a six-year low of 5.8 percent this year from 6.9 percent in 2007, Fitch Ratings said Aug. 28.
LUKoil and dairy maker Wimm-Bill-Dann are among companies that have said they are being hurt by higher costs.
"What happens next will depend on how the banking system will function," Yelena Sharipova, an economist at Renaissance Capital, said ahead of the results.
Companies are finding it hard to obtain long-term loans after the inflation rate reached 15 percent in August, though the government is "adequately prepared" for the current situation and is expanding mechanisms for boosting liquidity, Finance Minister Alexei Kudrin told lawmakers last week.
On Monday, Kudrin said the maximum amount of unallocated budget funds that could be placed with banks at weekly auctions aimed at boosting liquidity had been almost doubled to 1.23 trillion rubles. Demand at Tuesday's auction exceeded the 150 billion rubles on offer by 24 billion rubles, the Finance Ministry said.
Tikhomirov called the liquidity pledges a "welcome move" with quarterly value-added tax payments due to cut banks' balances in mid-October by about 450 billion rubles.
The industrial output report showed manufacturing production grew an annual 6.5 percent, compared with 4.6 percent in July.
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.