August 25, 2010
Russia's drought to trim 0.7% from GDP
Drought in Russia will cut almost an entire percentage point from the country's economic growth while triggering higher inflation, according to Deputy Economy Minister Andrei Klepach.
The drought will cut at least 0.7%-0.8% from the country's gross domestic product, Klepach said. Official forecasts predict that the country's GDP will grow by about 4% this year.
Russia's economy grew 2.5% last month, after expanding 4.9% in June, Klepach said.
Weeks of record-high temperatures and no rain have destroyed 26% of the country's grain crop and caused wild fires that burned out of control for weeks.
Rising food prices caused in part by dwindling grain supplies will squeeze inflation above the government's forecast of 6%-7% for the year, although inflation will still come in below last year's 8.8%, Klepach said.
The full extent of the drought's effect on the economy will only be known in November, after the fall harvest has been gathered and winter wheat sown, Klepach said.
