Russia Cuts GDP Forecast To 3.4 Percent

Russia, the world's ninth largest economy, cut its 2012 GDP forecast to 3.4 percent from 3.7 percent as investment growth is expected to decline, its economy minister said Friday.

Minister Elvira Nabiullina said that investment growth is projected to grow 6.6 percent this year, down from an original estimate of 7.8 percent. The country's GDP grew by 4.3 percent in 2011.

In the fourth quarter, Russia's GDP grew by 4.9 percent as the state spent more before elections in December. Its GDP grew at an annual rate of 4.8 percent in February, up from 3.9 percent in January.

High oil prices have been a windfall for Russia's petroleum industry, and the government expects average oil prices of $115 per barrel in 2012, up from a prior forecast of $100 per barrel.

The International Monetary Fund said Thursday that Russia's government should reduce its non-oil deficit and save reserves.

Besides protecting the economy from potential overheating, doing so would reduce fiscal vulnerabilities, IMF spokesman Gerry Rice said at a press conference.

Russia's inflation is expected to stay around 5 to 6 percent this year.

Nabiullina expects growth to pick up in coming years and outpace the global average.

Our economy will grow by 4.1 percent per year on average, higher than the world economy's 3.7 percent expected increase, she said in a statement.