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Officials: Euro Will Endure, Russian Growth Unsteady

The euro will survive, and “key” nations including Russia can help it, presidential aide Arkady Dvorkovich said Thursday.

“Europe, with the help of other key countries including Russia, will overcome the problems that have arisen,” he said. “We will do our part in solving Europe’s problems.”

Since Russia is a donor to the International Monetary Fund, and since Europe's massive stimulus plan will be partially funded using IMF reserves, Moscow will partly contribute to the solution of European problems, Dvorkovich said at a news conference.

The euro fell to the lowest against the dollar in more than four years on May 17 and is down 14 percent this year as the fiscal crisis spreading from Greece has undermined confidence. European leaders this month offered as much as 750 billion euros ($931 billion) to bolster confidence in the currency.

Europe “got into this difficult situation because of increasing budget deficits,” which should be a “lesson for us,” Economic Development Minister Elvira Nabiullina said at the same news conference. Russia's budget deficit may widen to 6.8 percent of gross domestic product this year from 5.9 percent in 2009, according to the Finance Ministry.

Stagnation in Europe “will finally lead to the renewal of incentives for European countries, European leaders [and] European companies to modernize in the same way that we are doing it today,” Dvorkovich said, adding that European economic growth will be “very slow or even zero” in the coming months or years.

Russia's recent data showing revival of the economy are positive signs, but it is premature to speak about a steady growth trend, Nabiullina said.

The country's gross domestic product grew by 0.7 percent in April month on month, while seasonally adjusted industrial output was up 1.8 percent, Nabiullina told reporters.

"This is a very good number, which gives grounds for optimism. We can't say that this is a sustainable trend as of yet — we call it signs of revival," she said.

The ministry's seasonally adjusted number shows monthly growth, while Wednesday's unadjusted data from the State Statistics Service showed that output slumped 3.4 percent from March.

Seasonal trends, such as April's typical fall in production and distribution of electricity, gas and water, stood behind the monthly overall decline.

Nabiullina also said Thursday that the Economic Development Ministry sees monthly inflation at between 0.3 percent and 0.4 percent in May.

On Wednesday, the State Statistics Service said CPI inflation was at 0.2 percent between May 1 and May 17 — half the rate of the corresponding period last year.

(Bloomberg, Reuters, MT)

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