To attribute Russia’s record growth rates to the high oil price alone would be missing the point. The private service sector and, above all, the construction industry are booming and the government is driving ahead with diversification of the economy by investing ininfrastructure, education, research and development. The aim is to enable the economic upswing to withstand lower oil prices as well.

Our Country Focus this month takes a look at Russia, South Africa and Turkey. Whereas in Russia growth will slow only marginally in the second half of this year and we expect full-year growth of 7.5 %, in South Africa the energy crisis and weak private consumption are casting a pall on the economy. South Africa is likely to record GDP growth of just over 3 % in 2008. The Turkish economy has so far defied all the difficulties and is growing solidly, but the Achilles‘ heel is the large external financing requirement. All three countries are suffering from record high inflation.