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Cost of drought

Source:  Copyright 2010, BBC
Date:  August 25, 2010
Original URL: Status ONLINE

The extreme heatwave, which caused a severe drought and wildfires in Russia, might be over, but both officials and consumers are now busy calculating its cost and trying to work out its consequences.

Russian deputy economy minister, Andrei Klepach, said earlier this week that the drought would take up to 0.8% off this year's economic growth, "or maybe even more than that".

The 0.8% official figure equals 313bn roubles ($10.1bn, £6.6bn at the current exchange rate), but is smaller than the 1.0-1.5% range some experts have come up with recently.

And it is not just about the annual economic growth rate being slower than expected.

In the first two full weeks of August, consumer prices in Russia rose by 0.4%, the same increase seen during the whole month of July.

Mr Klepach thinks that the August inflation rate will be about 0.5% "at best". While for 2010, it will definitely exceed the earlier forecast of 6-7%, it will be ...

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