Staff of Reuters 2 minutes Read this article (Adds detail) (Reuters) – MOSCOW, July 1 (Reuters) – Russia’s GDP increased 10.9 percent year on year in May, according to the economy ministry, as the oil-dependent economy continues to rebound from the price shock of 2020. GDP increased by 3.7 percent in the first five months of 2020, according to the ministry, compared to the same time in the previous year, when the economy was damaged by a severe decrease in oil prices and lockdowns aimed at limiting the spread of the new coronavirus. “Non-commodity industries, including as agriculture, construction, and manufacturing, provided the main boost to GDP, as they did a month before,” the ministry said in a statement. It also updated April economic growth to 10.8 percent from 10.7 percent previously. The GDP results support Russia’s general trend of economic recovery after the country’s economy dropped by 3% in 2020, the worst drop in 11 years. The economy is forecast to increase by roughly 3% this year, according to the economy ministry, while the central bank anticipates GDP to grow by 3% to 4%. According to figures released on Wednesday, Russia’s jobless rate fell to 4.9 percent in May, much below analysts’ expectations and approaching the pre-crisis levels targeted by President Vladimir Putin. However, the future is clouded by high inflation and a weak rouble, leading the central bank to tighten monetary policy. Inflation is a touchy subject ahead of a September parliamentary election, as it squeezes real incomes already strained by the COVID-19 pandemic. According to a Reuters poll released on Wednesday, the central bank is now projected to hike its key interest rate to 6.0 percent from 5.5 percent in July, for the fourth time this year. Higher interest rates are intended to control inflation by making lending more expensive and bank savings more appealing. Darya Korsunskaya reported; Andrey Ostroukh wrote; Giles Elgood and Clarence Fernandez edited./n
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