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Russia's inflation forecast upgraded again

08-31-2010 08:37 BJT

MOSCOW, Aug. 30 (Xinhua) -- Russia's Economic Development Ministry revised the inflation forecast for 2010 second time in a week to 7.5-7.8 percent by the end of the year, Deputy Minister Andrei Klepach said on Monday.

The previous forecast was 7 to 7.5 percent. Even earlier, the ministry predicted inflation rate at 6 to 7 percent, RBC news agency reported.

For 2011, the consumer inflation rate forecast now changed upward to 6-7 percent instead of previous forecast of 5.5-6.5 percent.

The drought consequences would partly be extended to the next year, thus affecting inflation rate, Klepach noted.

The ministry also downgraded the level of capital outflow in 2010. Earlier this level had been expected at zero. Now Russian economy is expected to lose 10 billion U.S. dollars.

However, according to the official, in 2011 the capital inflow will amount to the same 10 billion dollars and in 2012 to 5 billion dollars. In 2013, capital inflow will fall to zero again, Klepach said, adding that the capital flows would depend on the situation in the global economy.

"Even if the global economy grows, it does not mean the money will be channeled into the emerging markets," he explained, pointing out that foreign investors might opt to invest into other countries and not into Russia.

"Capital can't stand the smell of burnt," Klepach said referring to the consequences of this summer's massive wildfires in Russia.

Editor:Xiong Qu |Source: Xinhua

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