The drought also bodes ill for similar plans to develop the

Canada Goose online Drought to crimp not cripple Russia recovery

canada goose coats MOSCOW (Reuters) Russia worst heatwave on record may knock up to a full percentage point off economic growth this year, setting back business and government efforts to reboot the economy after the worst recession in 15 years.

With a more than month long drought raging in some of the country most fertile regions, analysts reckon sugar output may fall by buy canada goose jacket around an eighth, while the government sees the grain crop down canadian goose jacket by at least a Canada Goose Coats On Sale third.

canada goose coats on sale The thick cloak of toxic smog from forest and peat fires has uk canada goose halted production in some factories and is keeping shoppers away from the Moscow malls that form a huge chunk of Russia retail business.

Canada Goose Parka Prior to the surge in temperatures, canada goose the country had been enjoying an economic revival and 2010 gross domestic product was expected to make up around half of last year 7.9 percent slump.

Alexander Morozov, chief economist for canada goose uk outlet Russia and CIS at HSBC, expects the heatwave and its aftermath will now shave 1 percentage point off that growth or some $14 billion.

canada goose store losses in agriculture now look more Canada Goose sale serious, and I expect Canada Goose Jackets that will contribute 0.5 percentage points. uk canada goose outlet The remaining half a percent will come from other sectors lower industrial output, lower demand and lower productivity, he said.

Canada Goose Outlet The cost for the state budget may reach canada goose store some tens of billions of canada goose black friday sale roubles but that is of less concern given that spending this cheap Canada Goose year is planned to top 10 trillion roubles and the deficit is covered comfortably by borrowing and Moscow oil wealth.

Canada Goose Jackets Central bank canada goose coats on sale policymakers are also expected to hold fire on reacting to a rise in food prices and hence headline inflation, Canada Goose online trusting that bans on grain exports and the rouble relative canada goose factory sale strength will help ease the temporary impact on the economy.

Stock, bond and currency markets have yet to react sharply to the events of the past fortnight, though that may be cheap canada goose uk partially because many players are away from their desks in Moscow. The main MICEX index is trading just off three month highs reached last week; the rouble has eased somewhat, particularly against the euro.

SETBACK The government is also seeking to develop business outside of the commodities and oil and gas industries which have driven a boom since the late 1990s. If higher inflation were to continue, it could eventually mean higher costs of borrowing and investment for companies. The drought also bodes ill for similar plans to develop the agricultural sector.

UBS which estimates that grain related agriculture accounts canada goose clearance sale for about 2 percent of Russia oil focused economy has already cut its 2010 growth forecast to 7 percent from 7.5 percent, although it still remains much more optimistic than last month Reuters consensus of 4.2 percent.

Canada Goose canada goose clearance sale A grain export ban enforced from August 15 in a bid to tame inflation may undermine Russia reputation, shave $2 3 billion off export revenue and worsen the trade balance by raising food imports, according to Italian bank canada goose coats Unicredit.

canada goose deals Farming, forestry and hunting contributed 854 billion roubles ($29 billion), or some canada goose uk black friday 5 percent, to 2009 GDP although not all of that will be affected by drought.

canada goose black friday sale More expensive grain could also push up animal feed costs and may force farmers to slaughter livestock. The government will have to come up with rescue plans for the hardest hit to keep its popularity ahead of the 2012 presidential election.

For now though, the detrimental effect on the economy as a whole may be partially cushioned by the higher prices producers will receive for what they do manage to harvest and by government subsidies. The capital streets, shops Canada Goose Online and restaurants are notably more quiet than usual.

smog might harm consumption in August, as Moscow plays such a big part in Russian retail sales and services, said Sanna Elina Kurronen, analyst at Danske Bank.

cheap Canada Goose The services sector was already hurt by July heat, before the smog or the drought were fully felt and a widely expected rise in food prices will leave people with less to spend on other things.

canada goose clearance sale The Association for European Business warned on Monday that weather conditions may see car sales growth slow in August and September after a very strong July.

However most analysts said consumption and production would recover once the heat ends, now expected at the end of August.

buy canada goose jacket will catch up on production in following months, said Maxim Oreshkin, senior strategist at Credit Canada Goose Outlet Agricole. He sees total economic damage at 0.5 percentage points, as does Sergei Moiseev from Moscow University of Industry and Finance.

Danske Kurronen sees the GDP impact at under 1 percentage point that the weather normalizes at some point.

canadian goose jacket For some sectors Canada Goose Parka there are upsides. Air conditioning use pushed power demand 5.1 percent up year on year in July.

canada goose clearance SMALL DROP FOR BUDGET The government facing its second year of deficit after a decade in the black will have to pay for some of the canada goose uk shop damage.

The hit canada goose clearance will include 35 billion roubles in subsidies and loans pledged to the agriculture sector, at least 6.5 billion roubles to buy canada goose jacket cheap rebuild damaged homes, plus compensation for the families of the dead and the cost of putting out the fires.

buy canada goose jacket cheap The sums could well rise if the heat continues, but still seem like a drop in the ocean compared to this year government spending plan of 10.2 trillion roubles ($340 billion).

do not think there will be any kind of serious losses for the budget. It is not a comparable figure it is not a 25 30 percent rise in (state) pensions, said Oreshkin.

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