Russia's economy grew 3.4 percentin 2012, down from 4.3 percent in 2011. The economy ofRussia slowed in the second half of the year due to weak netexports, negative base effects, and destocking at the end ofthe year. More than four years after the global financialcrisis hit, the world economy remains sluggish. Industrialproduction lost momentum throughout last year, exportsexpanded only at a moderate pace, and imports even declinedfor three month during autumn 2012. Growth declined mainlydue to weaker performance of investment. Inventories wereflat as the restocking cycle after the crisis came to anend, and fixed investment expanded only moderately asbusiness remained cautious about future prospects. Theweaker performance of the tradable sectors reflects sluggishglobal demand and the poor agricultural harvest but also lowcompetitiveness in parts of the industry, as growth declinedfor all three subsectors. The capital account strengthenedin 2012 as net capital outflows decreased. According topreliminary estimates, the capital account deficit amountedto US$40.9 billion or 2 percent of Gross Domestic Product(GDP) in 2012, compared to US$76.2 billion or 4 percent ofGDP in 2011. The labor market remains tight. Theunemployment rate declined across the country, and vacancyand replacement rates increased. The number of poor peoplein Russia reached a record low. In the first nine months of2012, some 17.2 million of people were below the povertyline, three million less than a year ago and the lowestnumber in the last two decades. The weak externalenvironment, high inflation, flat oil prices and sluggishdomestic demand are set to postpone a pickup in growthtowards the second half of 2013. Nevertheless, modest growthand lower inflation are projected to reduce poverty further.
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