"If this progress continues, we will be able to achieve more optimistic indices this year than we had forecast," Zhukov said.
According to Russia's monetary policy guidelines for 2007, inflation is expected to slow down to 6.5-8%.
"Consumer prices increased 3.4% in the first quarter [of this year], against last year's 5%," Alexander Zhukov said.
The official said the inflow of direct investment into Russia was $12 billion in the first three months of 2007, with net capital inflow into the Russian economy standing at $41 billion.
"As a result we are witnessing a considerable increase in industrial output and a larger investment in those industries, which have not so far reported investment growth, such as mechanical engineering," the deputy prime minister said.
President Vladimir Putin said the banking sector was also reporting steady growth and increasing capitalization, with processing industries on the rise.
"Investment growth is continuing at a good pace," the president said.
Zhukov said that the banking sphere's capitalization went up 50% and loans to the real sector of the economy increased 46% in 2006.
"[This] will make it possible to increase domestic and foreign investment," he said.
