In the fourth quarter of 2010 the Russian economy grew by less than expected, despite the higher commodity prices and investment growth induced demand. In the fourth quarter, gross domestic product (GDP) of the country increased by 4.5% yoy compared with 3.1 percent in the previous quarter. Analysts’ expectations were for growth of 4.8 percent. Federation president Dimitri Medvedev wants to 5 years the growth of the Russian economy to reach 10%, so that Moscow – the largest exporter of energy resources – to align this indicator with China, Brazil and India. In the third quarter the Russian economy has lost momentum after the country experienced the worst drought in half a century. Analysts say the drought has slowed growth to 0.8 percent. “The recovery is still very hesitant, especially if you look at the growth of Russian economy a few years ago,” said Neil Shearing, an analyst at Capital Economics in London. “There is evidence that income growth is slowing in the country and this is reflected in poor sales. The recovery of Russia lags behind the rest of the group BRIC (Brazil, Russia, India and China). In the last quarter of last year the Chinese economy grew 10.3 percent, India with 8.2 percent and Brazil by 5%.

The RBI decided to increase the base rate in the country with a quarter point to 5.75 percent. This is the second increase in interest within one month, the goal of tightening monetary policy to combat inflation. Over the past five months the appreciation of life in India is two-digit, and in July is expected to increase producer prices by 11 percent annually, Air Force forward. With a major contribution to this rise in prices of food and fuel. Last year, India became a victim of the biggest floods for the past 37 years. This significantly reduce agricultural harvests and the prices went up, the agency adds. Against the backdrop of high inflation in India and the government expects strong economic growth of 8.5 per cent this year. Today it became clear that India will also begin conducting stress tests of the banking system. Unlike the U.S. and Europe, however, the Government plans to introduce a regularity and banks to be tested every six months.
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Government securities (GS) of developing Asian economies are protected from the Greek crisis and will perform well this year thanks to low levels of debt in these countries and because of the rapid growth of their economies. It predicts the international credit rating agency Standard & Poor’s, quoted by Bloomberg. Its economists point out that while government bonds of developed countries are less reliable because they are exposed to a deepening crisis of sovereign debt of Greece. William Hess, director of the division of Standard & Poor’s sovereign ratings for Asia, believes that the interest of investors to the region will increase, but the direct risk of transferring the debt crisis of Europe and Asia still remains limited. Asia surpassed other regions in contributing to the recovery of global economy this year, which happens for the first time in history, according to analysts at the International Monetary Fund (IMF). Countries like China, India and South Korea have caused the region to gain a record amount of foreign exchange reserves. This is the response from the Asian crisis in 1997-98, which showed that their central banks can not ensure the stability of local currencies and financial system. Now, the dynamic rates of economic growth in Asian countries, coupled with their low levels of debt, make them an attractive investment alternative. These factors will promote the strengthening of capital flows and the reduction in risk premiums in Asia, considered from Standard & Poor’s.
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