Andrey Klepach, head of the Economy Ministry’s Macroeconomic Forecasting Department, said inflation in Russia was expected to be 0.6 percent in May 2004. On the whole, inflation is slowing down. In particular, consumer prices were rising slower in May, and monetary policy was tightened.

According to Mr. Klepach, a 10 percent annual inflation is a high rate for Russia. In January-April 2003, inflation was 4.6 percent, against 6.2 percent in the same period last year. In May 2003, inflation was 0.8 percent.

Mr. Klepach said the ruble had strengthened against the dollar by 5.3 percent in real terms in January-April 2004, and the ruble’s real exchange rate against the euro was up 8.3 percent. The ruble strengthened by 5.6 percent against the basket of currencies of Russia’s main trade partners. The ruble is expected to strengthen 6 percent against the basket of currencies in January-May 2004.

The ruble’s real exchange rate against the dollar rose 5.2 percent in the first quarter of 2004, and the ruble strengthened against the dollar by 6 percent in real terms. The ruble’s real effective exchange rate was up 4.7 percent.

According to Mr. Klepach, Russia’s trade surplus was $24bn in January-April 2004, and exports amounted to $51bn, up 23 percent compared with January-April 2003, while imports increased 21 percent to $27bn.

He said the Macroeconomic Forecasting Department was going to revise its industrial production forecast for 2004 from 5.9 percent to 6.1 percent. According to Mr. Klepach, industrial production was up 7.4 percent in January-April 2004 compared to the same period a year earlier. In April, manufacturing growth was 6.7 percent.