Russia slashes economic growth forecasts, second time this year

A worker operates a mixer of fused aluminium at the foundry shop of the Rusal Sayanogorsk aluminium smelter outside the town of Sayanogorsk, some 480 km (298 miles) south of the Siberian city of Krasnoyarsk, August 21, 2013.

Credit: Reuters/Ilya Naymushin

By Darya Korsunskaya

MOSCOW | Mon Aug 26, 2013 11:02am EDT

MOSCOW (Reuters) - Russia cut its economic forecasts for the second time this year, increasing pressure on Vladimir Putin to revive growth that has faded since a state spending splurge helped secure his election to a third Kremlin term.

The Economy Ministry slashed its forecasts for 2013 and 2014 after growth in the second quarter of this year was the slowest since the slump of 2009, documents obtained by Reuters on Monday showed.

The news broke as the president made one of his many tours to key industrial regions - this time to Kemorovo in the Kuzbass coalfields - to demand greater urgency in developing Russia's vast resource base.

The lower growth forecast reflects home-grown problems of weak industrial output - now expected to barely grow this year - slowing investment and a waning of the feel-good factor that helped Putin win a third term as president in March 2012.

Not even oil prices at a historically-high $110 per barrel have been enough to avert the slowdown in the world's top energy producer - even if Russia's external surpluses and low debts do shield it from the current turmoil in other emerging markets.

"To grow this time it will not be enough to stimulate private consumption," said Vladimir Miklashevsky, an economist at Danske Bank.

Miklashevsky was referring to Putin's past reliance on distributing windfall energy revenues to boost living standards and drive average annual gross domestic product (GDP) growth rates of 7 percent during his first two presidential terms from 2004-08.

The Economy Ministry cut its 2013 forecast to 1.8 percent from 2.4 percent, also hit by weaker exports and consumption growth. The forecast was below median expectations of 2.5 percent growth in a regular Reuters poll of economists.

It downgraded the 2014 outlook to a range of 2.8-3.2 percent from 3.7 percent.

REALITY CHECK

Economy Minister Alexei Ulyukayev has warned that Russia's $2 trillion economy could stagnate, but played down risks of a recession, even though some economists estimate that real growth has now contracted for two consecutive quarters.

Weaker growth will put pressure on Finance Minister Anton Siluanov's budget, which is due to go before parliament soon and which foresees a modest deficit next year.

Economists see next year's forecast as over-optimistic.

"Growth may accelerate next year only if the government increases expenditure substantially," said Natalia Orlova, chief economist at Alfa-Bank.

The government has already broken Putin's pre-election pledge to balance the books by 2015, proposing measures that would only increase Russia's reliance on commodities.

The government has been considering various stimulus measures, unveiling a $13 billion investment plan to build new roads and railways by tapping a rainy-day fund.

Officials and bankers have been pressing, meanwhile, for easier monetary policy to lift growth towards the government target of 5 percent.

The central bank, now led by Elvira Nabiullina, Putin's former economic adviser, kept interest rates on hold in August. It has said it will start cutting rates when inflation is inside its target corridor of 5-6 percent, expected in the second half of 2013.

The economy ministry kept its inflation forecast for the end of 2013 unchanged at 5-6 percent, but raised its 2014 estimate by half a percentage point to 4.5-5.5 percent.

"The central bank will not cut rates. The global environment is setting higher rates in the world economy and we should not ignore it," said Orlova.

The rouble fell to its lowest in four years against the dollar-euro basket the central bank tracks, hit by capital outflows as emerging market investors expect the U.S. Federal Reserve to wind down its money-pumping measures.

(Writing and additional reporting by Maya Dyakina; Editing by Douglas Busvine, Ruth Pitchford)

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Russia slashes economic growth forecasts, second time this year

A worker operates a mixer of fused aluminium at the foundry shop of the Rusal Sayanogorsk aluminium smelter outside the town of Sayanogorsk, some 480 km (298 miles) south of the Siberian city of Krasnoyarsk, August 21, 2013.

Credit: Reuters/Ilya Naymushin

By Darya Korsunskaya

MOSCOW | Mon Aug 26, 2013 11:02am EDT

MOSCOW (Reuters) - Russia cut its economic forecasts for the second time this year, increasing pressure on Vladimir Putin to revive growth that has faded since a state spending splurge helped secure his election to a third Kremlin term.

The Economy Ministry slashed its forecasts for 2013 and 2014 after growth in the second quarter of this year was the slowest since the slump of 2009, documents obtained by Reuters on Monday showed.

The news broke as the president made one of his many tours to key industrial regions - this time to Kemorovo in the Kuzbass coalfields - to demand greater urgency in developing Russia's vast resource base.

The lower growth forecast reflects home-grown problems of weak industrial output - now expected to barely grow this year - slowing investment and a waning of the feel-good factor that helped Putin win a third term as president in March 2012.

Not even oil prices at a historically-high $110 per barrel have been enough to avert the slowdown in the world's top energy producer - even if Russia's external surpluses and low debts do shield it from the current turmoil in other emerging markets.

"To grow this time it will not be enough to stimulate private consumption," said Vladimir Miklashevsky, an economist at Danske Bank.

Miklashevsky was referring to Putin's past reliance on distributing windfall energy revenues to boost living standards and drive average annual gross domestic product (GDP) growth rates of 7 percent during his first two presidential terms from 2004-08.

The Economy Ministry cut its 2013 forecast to 1.8 percent from 2.4 percent, also hit by weaker exports and consumption growth. The forecast was below median expectations of 2.5 percent growth in a regular Reuters poll of economists.

It downgraded the 2014 outlook to a range of 2.8-3.2 percent from 3.7 percent.

REALITY CHECK

Economy Minister Alexei Ulyukayev has warned that Russia's $2 trillion economy could stagnate, but played down risks of a recession, even though some economists estimate that real growth has now contracted for two consecutive quarters.

Weaker growth will put pressure on Finance Minister Anton Siluanov's budget, which is due to go before parliament soon and which foresees a modest deficit next year.

Economists see next year's forecast as over-optimistic.

"Growth may accelerate next year only if the government increases expenditure substantially," said Natalia Orlova, chief economist at Alfa-Bank.

The government has already broken Putin's pre-election pledge to balance the books by 2015, proposing measures that would only increase Russia's reliance on commodities.

The government has been considering various stimulus measures, unveiling a $13 billion investment plan to build new roads and railways by tapping a rainy-day fund.

Officials and bankers have been pressing, meanwhile, for easier monetary policy to lift growth towards the government target of 5 percent.

The central bank, now led by Elvira Nabiullina, Putin's former economic adviser, kept interest rates on hold in August. It has said it will start cutting rates when inflation is inside its target corridor of 5-6 percent, expected in the second half of 2013.

The economy ministry kept its inflation forecast for the end of 2013 unchanged at 5-6 percent, but raised its 2014 estimate by half a percentage point to 4.5-5.5 percent.

"The central bank will not cut rates. The global environment is setting higher rates in the world economy and we should not ignore it," said Orlova.

The rouble fell to its lowest in four years against the dollar-euro basket the central bank tracks, hit by capital outflows as emerging market investors expect the U.S. Federal Reserve to wind down its money-pumping measures.

(Writing and additional reporting by Maya Dyakina; Editing by Douglas Busvine, Ruth Pitchford)

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Russia slashes economic growth forecasts, second time this year

A worker operates a mixer of fused aluminium at the foundry shop of the Rusal Sayanogorsk aluminium smelter outside the town of Sayanogorsk, some 480 km (298 miles) south of the Siberian city of Krasnoyarsk, August 21, 2013.

Credit: Reuters/Ilya Naymushin

By Darya Korsunskaya

MOSCOW | Mon Aug 26, 2013 11:02am EDT

MOSCOW (Reuters) - Russia cut its economic forecasts for the second time this year, increasing pressure on Vladimir Putin to revive growth that has faded since a state spending splurge helped secure his election to a third Kremlin term.

The Economy Ministry slashed its forecasts for 2013 and 2014 after growth in the second quarter of this year was the slowest since the slump of 2009, documents obtained by Reuters on Monday showed.

The news broke as the president made one of his many tours to key industrial regions - this time to Kemorovo in the Kuzbass coalfields - to demand greater urgency in developing Russia's vast resource base.

The lower growth forecast reflects home-grown problems of weak industrial output - now expected to barely grow this year - slowing investment and a waning of the feel-good factor that helped Putin win a third term as president in March 2012.

Not even oil prices at a historically-high $110 per barrel have been enough to avert the slowdown in the world's top energy producer - even if Russia's external surpluses and low debts do shield it from the current turmoil in other emerging markets.

"To grow this time it will not be enough to stimulate private consumption," said Vladimir Miklashevsky, an economist at Danske Bank.

Miklashevsky was referring to Putin's past reliance on distributing windfall energy revenues to boost living standards and drive average annual gross domestic product (GDP) growth rates of 7 percent during his first two presidential terms from 2004-08.

The Economy Ministry cut its 2013 forecast to 1.8 percent from 2.4 percent, also hit by weaker exports and consumption growth. The forecast was below median expectations of 2.5 percent growth in a regular Reuters poll of economists.

It downgraded the 2014 outlook to a range of 2.8-3.2 percent from 3.7 percent.

REALITY CHECK

Economy Minister Alexei Ulyukayev has warned that Russia's $2 trillion economy could stagnate, but played down risks of a recession, even though some economists estimate that real growth has now contracted for two consecutive quarters.

Weaker growth will put pressure on Finance Minister Anton Siluanov's budget, which is due to go before parliament soon and which foresees a modest deficit next year.

Economists see next year's forecast as over-optimistic.

"Growth may accelerate next year only if the government increases expenditure substantially," said Natalia Orlova, chief economist at Alfa-Bank.

The government has already broken Putin's pre-election pledge to balance the books by 2015, proposing measures that would only increase Russia's reliance on commodities.

The government has been considering various stimulus measures, unveiling a $13 billion investment plan to build new roads and railways by tapping a rainy-day fund.

Officials and bankers have been pressing, meanwhile, for easier monetary policy to lift growth towards the government target of 5 percent.

The central bank, now led by Elvira Nabiullina, Putin's former economic adviser, kept interest rates on hold in August. It has said it will start cutting rates when inflation is inside its target corridor of 5-6 percent, expected in the second half of 2013.

The economy ministry kept its inflation forecast for the end of 2013 unchanged at 5-6 percent, but raised its 2014 estimate by half a percentage point to 4.5-5.5 percent.

"The central bank will not cut rates. The global environment is setting higher rates in the world economy and we should not ignore it," said Orlova.

The rouble fell to its lowest in four years against the dollar-euro basket the central bank tracks, hit by capital outflows as emerging market investors expect the U.S. Federal Reserve to wind down its money-pumping measures.

(Writing and additional reporting by Maya Dyakina; Editing by Douglas Busvine, Ruth Pitchford)

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UK GDP Revised Upward In Second Quarter

UK GDP output for the second quarter of 2013 has been revised upwards, according to officially released figures.

The Office for National Statistics (ONS) said the economy grew by 0.7% in the three months.

The ONS gross domestic product (GDP) figure was up 0.1% from the estimate released in July.

Rosier growth was seen across all sectors of the economy, with small upward revisions across manufacturing, construction and parts of services.

In late afternoon trading the FTSE 100 was up around 0.75%.

Second-quarter growth more than doubled from 0.3% expansion in the first three months, raising hopes that the economy is now powering out of its five-year slump.

The Treasury said the upward revision confirmed the UK is "moving from rescue to recovery".

Construction was one of the hardest hit sectors in the global crisis

A spokeswoman said: "There is still a long way to go, but the economy is on the right track and the Government is committed to its economic plan that has already cut the deficit by a third and enabled the private sector to create over 1.3 million new jobs."

Output from the UK's building sites expanded by 1.4% in the second quarter from an initial 0.9% estimate as the housing market was ignited by state stimulus schemes, including Help to Buy and Funding for Lending.

There were also brighter signs from factories, which grew output by 0.7% during the quarter, up from an initial 0.4% estimate.

And output from distribution, hotels and catering firms, was revised up to 1.7% from 1.5%, while growth across business services and finance firms was also revised higher to 0.6% from 0.5%.

The overall services sector expanded by an unchanged 0.6%, but output from the agriculture sector was revised up to 1.7% from the 1.1% first estimate.

Britain's shrinking net trade deficit, which dropped to £3.2bn in the second quarter from a £4.3bn deficit in the first quarter, also contributed to the increase in output as exports leapt to a record level.

James Knightley, economist at ING Bank, said the higher estimate of GDP will "boost optimism on the economy".

Markit chief economist Chris Williamson added it was a "very encouraging picture of a broad-based upturn across almost all sectors of the economy".

But Chris Leslie MP, Labour's shadow financial secretary to the Treasury, said: "These figures confirm that after three wasted years of flatlining we finally have some welcome but long overdue growth.

Agricultural output was revised upward by more than half

"But for all George Osborne's complacent claims that the economy is now fixed, for ordinary people things are getting harder. While millionaires have been given a huge tax cut most people are still seeing prices rising much faster than wages.

"And real risks remain. The Governor of the Bank of England is right to warn that the recovery is weak, and it is the slowest on record."

Pay and pension contributions increased by 2.4% in the second quarter - the highest quarterly increase since late 2000 - with the pay spike boosted by unusually high bonus payments in April.

The ONS said spending across various parts of the economy contributed to growing output.

Spending by households increased 0.4% in the quarter, raising hopes that higher consumer spending will drive the recovery, and is now 1.6% higher than a year earlier.

The ONS said overall economic output is now 3.2% below its peak in the first quarter of 2008 - it dropped as low as 7.2% below the peak in the second quarter of 2009.

The first estimate published in late July was based on 44% of data, while Friday's estimate is based on 88% of data.

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UK GDP Revised Upward In Second Quarter

UK GDP output for the second quarter of 2013 has been revised upwards, according to officially released figures.

The Office for National Statistics (ONS) said the economy grew by 0.7% in the three months.

The ONS gross domestic product (GDP) figure was up 0.1% from the estimate released in July.

Rosier growth was seen across all sectors of the economy, with small upward revisions across manufacturing, construction and parts of services.

In late afternoon trading the FTSE 100 was up around 0.75%.

Second-quarter growth more than doubled from 0.3% expansion in the first three months, raising hopes that the economy is now powering out of its five-year slump.

The Treasury said the upward revision confirmed the UK is "moving from rescue to recovery".

Construction was one of the hardest hit sectors in the global crisis

A spokeswoman said: "There is still a long way to go, but the economy is on the right track and the Government is committed to its economic plan that has already cut the deficit by a third and enabled the private sector to create over 1.3 million new jobs."

Output from the UK's building sites expanded by 1.4% in the second quarter from an initial 0.9% estimate as the housing market was ignited by state stimulus schemes, including Help to Buy and Funding for Lending.

There were also brighter signs from factories, which grew output by 0.7% during the quarter, up from an initial 0.4% estimate.

And output from distribution, hotels and catering firms, was revised up to 1.7% from 1.5%, while growth across business services and finance firms was also revised higher to 0.6% from 0.5%.

The overall services sector expanded by an unchanged 0.6%, but output from the agriculture sector was revised up to 1.7% from the 1.1% first estimate.

Britain's shrinking net trade deficit, which dropped to £3.2bn in the second quarter from a £4.3bn deficit in the first quarter, also contributed to the increase in output as exports leapt to a record level.

James Knightley, economist at ING Bank, said the higher estimate of GDP will "boost optimism on the economy".

Markit chief economist Chris Williamson added it was a "very encouraging picture of a broad-based upturn across almost all sectors of the economy".

But Chris Leslie MP, Labour's shadow financial secretary to the Treasury, said: "These figures confirm that after three wasted years of flatlining we finally have some welcome but long overdue growth.

Agricultural output was revised upward by more than half

"But for all George Osborne's complacent claims that the economy is now fixed, for ordinary people things are getting harder. While millionaires have been given a huge tax cut most people are still seeing prices rising much faster than wages.

"And real risks remain. The Governor of the Bank of England is right to warn that the recovery is weak, and it is the slowest on record."

Pay and pension contributions increased by 2.4% in the second quarter - the highest quarterly increase since late 2000 - with the pay spike boosted by unusually high bonus payments in April.

The ONS said spending across various parts of the economy contributed to growing output.

Spending by households increased 0.4% in the quarter, raising hopes that higher consumer spending will drive the recovery, and is now 1.6% higher than a year earlier.

The ONS said overall economic output is now 3.2% below its peak in the first quarter of 2008 - it dropped as low as 7.2% below the peak in the second quarter of 2009.

The first estimate published in late July was based on 44% of data, while Friday's estimate is based on 88% of data.

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Samsung sells 76 million smartphones in second quarter, boosting market share: report

Samsung Electronics Co's latest Galaxy S4 phone is seen during its launch at the Radio City Music Hall in New York March 14, 2013.

Credit: Reuters/Adrees Latif

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Samsung sells 76 million smartphones in second quarter, boosting market share: report

Samsung Electronics Co's latest Galaxy S4 phone is seen during its launch at the Radio City Music Hall in New York March 14, 2013.

Credit: Reuters/Adrees Latif

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Samsung sells 76 million smartphones in second quarter, boosting market share: report

SEOUL (Reuters) - Samsung Electronics Co Ltd sold 76 million smartphones in the second quarter, expanding its market share to 33.1 percent, Strategy Analytics said on Friday.

Overall, the global smartphone market grew 47 percent to a record 229.6 million, the research firm said.

Second-ranked Apple Inc saw its market share shrink to 13.6 percent after selling 31.2 million iPhones, as smaller rivals such as LG Electronics Inc, ZTE Corp and Huawei Technologies Co Ltd seized larger slices.

(Reporting by Miyoung Kim; Editing by Stephen Coates)

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