The economy grew by 8.0% in the first half of 2010, with construction and services providing the main impetus to growth. Favorable weather boosted agricultural growth to 6.9%. Construction benefited from increased public infrastructure investment undertaken as part of the anticrisis program. Foreign direct investment was buoyant in the first half of 2010, amounting record US$1.6 billion – a 150% year-on-year increase, the publication said.

A one-third increase in bank lending, mainly to industrial enterprises and small and medium-sized enterprises (SMEs), helped to underpin the expansion. With the economy running according to plan, the Update maintains growth forecasts of 8.5% for 2010 and 9.0% for 2011.

The government reported inflation for the first half of 2010 at 4.0%, significantly lower than its announced target of 9.0% for the year, which has not been revised. Lower import prices of consumer goods and a government cap on utilities prices were major contributing factors containing inflation pressures. Given the increased pace of nominal depreciation of the local currency and an accommodative credit policy by the monetary authority, inflation pressures will build. The Update maintains the April 2010 inflation forecast at 9.3%, while edging up the 2011 projection from 9.0% to 9.5%, the ADB said.

Exports increased by 14.3% year on year in the first half of 2010 due to the economic recovery in the Russian Federation and strong global demand for metals. Imports were lower by 18.9% during the same period, as imports of machinery and equipment declined apparently reflecting completion of investment projects, however they are likely to rise in the second half of the year. Since growth in the economy and exports are in line with forecasts in ADO 2010, the Update maintains the earlier forecast of the current account surplus of 13.0% of GDP in 2010 and 14.0% in 2011.