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6 Dec, 2006 08:49

World Bank more optimistic about Russia's economy than Moscow

World Bank more optimistic about Russia's economy than Moscow

The World Bank has released a report on Russia's economy. It painted a rosier picture than even the Russian Economics Ministry, but it also carried some warnings about what it sees as problem areas.

The World Bank published an upbeat report on Russia's economic growth, suggesting capital inflows and commodity exports will continue to fuel domestic demand.

The report says capital inflows and profits from raw material exports continue to fuel domestic demand. It will push annual GDP to 7%. That is 1% more than Tuesday's forecast from the Russian Economic Ministry.

The World Bank warns, however, that growth is concentrated in non-trading sectors, like real estate and services, which benefit from a stronger rouble. The World Bank is also concerned that growing support for sales tax which could have a damaging effect on the economy and about the lack of investment to meet growing demands for energy. Russian consumers will have to pay more, but that should benefit energy producers.