The GDP grew 0.5 percent in May 2004 compared to April 2004. In January-May 2004, GDP growth was 7.3 percent.

In the estimation the Economy Ministry, inflation will be 0.7 percent in June 2004. According to Mr. Klepach, inflation will be about 6 percent in the first half of 2004. “This inflation rate will be due to a high rise in food prices,” Mr. Klepach said. He stressed that an increase in gasoline prices would not have any significant impact on inflation. In his opinion, inflation would not rise above 10 percent by the end of 2004. “But if the dollar costs more than 30 RUR/USD this year, we will not manage to meet the 10 percent target,” he noted.

Mr. Klepach said the ruble had strengthened against the dollar by 4.3 percent in January-May 2004. According to him, the ruble strengthened by 5.6 percent against the basket of currencies over this period.

Russia’s trade surplus was $30.8bn in January-May 2004, according to preliminary information. Exports amounted to $65.2bn in January-May 2004, and imports were $34.4bn. In May 2004, the trade surplus was $6.3bn, with exports of $13.7bn and imports of $7.4bn. Mr. Klepach said the trade surplus continued to rise, but a slowdown was possible in the second half of 2004. “This will be due to a fall in oil prices (the price of oil might drop to $26 per barrel by the end of the year) and internal risks, including competition problems,” he said.