By Maria Levitov
Sept. 8 (Bloomberg) -- Russia's economy expanded at a slower pace in the second quarter as industrial output faltered, the Federal Statistics Service may say this week.
Gross domestic product rose 7.6 percent, compared with 8.5 percent in the previous period, according to the median forecast of 10 economists surveyed by Bloomberg. The economy grew 8.1 percent in the second quarter of 2007, according to the statistics office, which does not adjust the figures for seasonal variations. The GDP data will probably be released on Sept. 10 or 11.
``A higher cost of credit slowed investment growth as the global credit crunch began to affect Russia,'' said Vladimir Osakovsky, an economist at UniCredit SpA in Moscow. ``An influx of imports also hit producers'' because a strong ruble made it harder for them to compete, he said.
Growth may slip to 7.8 percent this year from 8.1 percent in 2007, according to the Economy Ministry, as rising consumer prices sap domestic demand and erode gains in average wages. Industrial output rose in June at the slowest pace in 5 1/2 years and a gauge of manufacturing output compiled by VTB Bank Europe declined in each of the three months of the second quarter.
The ruble gained 5.22 percent against the U.S. dollar this year through July 1, according to Bloomberg data. Foreign direct investment totaled $11.1 billion in the first half, a 30 percent decline from last year, according to the statistics office.
Still, the rate of economic growth ``is still high,'' Osakovsky said, and the recent decline of the ruble will help domestic producers. UniCredit's forecast is for 7.7 percent growth in the second quarter.
Support for Ruble
Russia's central bank sold foreign currency last week to prop up the ruble, which was slumping because of investors pulling money out after the conflict with Georgia, the dollar's rally and a drop in commodities prices. Net capital outflow reached $4.6 billion in August, according to the central bank's preliminary estimates.
In corporate news, Wal-Mart Stores Inc., Carrefour SA, Finland's Kesko Oyj and Croatia's Agrokor Group may submit their final bids for OOO Lenta, Russia's third-largest food retailer by sales, on Sept. 8.
OAO Sitronics, a technology unit of Russia's billionaire Vladimir Yevtushenkov's holding company AFK Sistema, will report second quarter earnings on Sept. 9.
OAO Norilsk Nickel's board may discuss on Sept. 10 spinning off its energy assets into a separate company after shareholders blocked a prior plan last year.
Markets
The ruble-denominated Micex stock index sank 3.7 percent to 1,234.71 on Friday, extending its weekly decline to 8.5 percent. That marked the index's lowest level since June 2006, and its intraday decline of 9 percent was also the broadest since June 2006. The dollar-denominated RTS index retreated 3.8 percent to 1,469.15 on Friday, bringing its weekly slide to 11 percent.
The ruble fell against the dollar-euro basket used to manage its volatility last week as investors sold off the currency following Russia's military intervention in Georgia, a drop in commodity prices and a rise of the dollar.
The managed currency slipped 3.4 percent against the dollar and weakened 0.5 percent against the euro last week. Those movements meant it weakened about 1.9 percent to 30.3792 against the basket, which is calculated by multiplying the rate to the dollar by 0.55 and the euro rate by 0.45, then adding the two numbers together.
The following is a list of events in Russia this week:
OOO Lenta final bids Sept. 8
OAO Sitronics 2Q earnings Sept. 9
Norilsk board meeting Sept. 10
Weekly inflation Sept. 10
Russian 2Q GDP Sept. 10 or later
Trade surplus from central bank Sept. 11
Weekly currency reserves Sept. 11
Money supply Sept. 12
To contact the reporter on this story: Maria Levitov in Moscow at mlevitov@bloomberg.net
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