The Wall Street Journal warns of an overheating Russian economy:
But with inflation surging in recent months -- the annual rate in May was the highest in more than five years -- the worry now is that the economy is growing too fast. Inflation in May was up 15.1% from the year before.In April, the Economic Development Ministry revised its 2008 GDP growth forecast to 7.6% from 7.1% previously. The economy grew 8.1% in 2007.Finance Minister Alexei Kudrin warned last week that the economy is showing "strong signs" of overheating, with demand growing 15% from a year ago and imports double that rate. (...)
Economists expect further monetary-policy tightening in the coming months, but Yaroslav Lissovolik, chief economist at Deutsche Bank, said inflation will remain high. He expects prices to rise 11.9% by year-end -- unchanged from last year. The official target remains below 10.5%.
"You need other measures in addition to the purview of the central bank," he said. "You need greater fiscal austerity and other structural changes, such as increased competition."
