Hydrocarbon exports have been the main driving force behind Russia's recent economic growth and President Vladimir Putin set the target in 2003 of doubling gross domestic product in a decade.
But Andrei Klepach, the head of the ministry's macroeconomic forecasts department, said he thought this was unlikely to happen. He said oil exports were losing momentum and that the sector's contribution to GDP growth would fall from about 33% now to 25% in 2007.
"Export growth rates are dropping to 3% [a year], resulting in us losing 1.5-2% on GDP growth," Klepach told parliamentary hearings.
Russia's oil sector grew by about 10% per year in 2003-2005, whereas now the annual rate of growth has dropped to 1.5-2%, Klepach said. He added that even with oil prices at $77-80 per barrel, Russia's economic growth would not exceed 6.3-6.4%, short of the minimum 7% needed to double GDP. Brent crude is currently trading at around $64 a barrel and Urals oil, Russia's main export blend, is trading at $58.5 a barrel.
Klepach said economic diversification was the best way to maintain Russia's growth and that an increase in the share of industrial products in overall exports could guarantee budgetary stability. He said oil yielded $100 billion in budget revenues, but mechanical engineering brought in only $14-15 billion.
