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Russian economy continued to expand in second half of summer — Bank of Russia

The regulator said in a report that signs of a slowdown that were seen in survey data in June and July were replaced by a new round of recovery in August

MOSCOW, September 5. /TASS/. The Russian economy grew in the second half of the summer despite increasing constraints on the part of production elements, according to Bank of Russia experts.

"Despite increasing restrictions on the part of production factors, the Russian economy grew in the second half of the summer. The signs of a slowdown, which were observed in poll data in June and July, were replaced by a new round of recovery in August," the regulator’s report said.

Analysts noted that the Russian economy continued to grow at a relatively quick pace in July and August.

The Bank of Russia also stated that the expansion of sustainable components of price dynamics and consumer prices in general has accelerated. "This is aided by significant labor market, production capacity, and technological resource constraints," the regulator’s experts said.

The current pricing patterns pose hazards to Russia's inflation returning to the goal level of 4% in 2024, according to Bank of Russia. "The upward trend in the current dynamics of consumer prices strengthened and spread to many groups of goods and services in July-August <…> As a result, the current price dynamics, taking into account the ruble's strong inertia, creates risks for inflation to return to the target in 2024," the regulator said.

Deputy Chairman of the Bank of Russia Alexey Zabotkin said earlier on Tuesday that Russia’s GDP growth by the end of the year can be within the upper bound of the forecast at 1.5-2.5%. "We will improve the forecast. According to current data, growth for this year is approaching the upper limit of the forecast," he said.

At the same time, Zabotkin noted that annual inflation in Russia is approaching the high limit of the Bank of Russia's predicted range of 5-6.5%. "Considering the July data and the live data for August, inflation is moving closer to the upper limit of the range that was published following the results of the July meeting," he said.

The growing volume of imports, he noted, continues to influence the ruble exchange rate. "At the moment, the rate is significantly affected by the dynamics of imports, the demand for which is supported by the expansion of lending and domestic demand," Zabotkin explained.