Russia’s economic expansion eased in the second quarter to the slowest pace in a year as weaker growth in China and Europe’s debt crisis curbed demand for its commodities exports.

Gross domestic product rose 4 percent from a year earlier, the weakest pace since the same quarter of 2011 and down from 4.9 percent in the January-March period, the Federal Statistics Service in Moscow said today in an e-mailed statement. That matched the median estimate of 18 economists in a Bloomberg survey, with forecasts ranging from 3.6 percent to 5.6 percent.

Russia is relying on domestic demand to propel expansion as the debt crisis in Europe and slowing growth in China sap demand for raw materials. The central bank today remained on the sidelines of a global round of monetary stimulus, saying slower industrial growth posed no risk to the broader economy.

“A slowdown in the second quarter and further in the second half is certainly on the cards,” Dmitry Polevoy, chief economist for Russia and Kazakhstan at ING Groep NV in Moscow, said before the release. The contribution of foreign sales to economic growth “looks less certain with exports hit by faltering demand from the EU.”

The Micex Index (INDEXCF) of 30 stocks has gained 2.1 percent this year, lagging behind the MSCI Emerging Markets Index’s advance of 6.5 percent. The ruble-denominated benchmark gauge traded down 1.7 percent, the most since July 23, to 1,431.72 as of 3:06 p.m. in Moscow.

Euro Crisis

The European Union, which accounts for 49 percent of Russian trade, is battling to stanch a debt crisis that’s threatening to trigger another global slowdown. Euro-area GDP will probably drop 0.3 percent this year before rising 1 percent in 2013, the European Commission said May 11.

Russia’s trade surplus narrowed in June to the smallest since November 2010 as exports shrank to $40.8 billion, down from $45.2 billion in May, the central bank said today.

Economic growth in China, Russia’s largest single trade partner, eased to 7.6 percent last quarter, the weakest level in three years, lowering demand for imports such as metals. Chinese export growth fell to 1 percent in July, missing all 30 estimates in a Bloomberg survey, the customs bureau said today in Beijing.

Russian industry growth decelerated to 1.9 percent in June from 3.7 percent the previous month, easing more than economists forecast. Fixed-capital investment rose 4.7 percent, down from 7.7 percent.

Stronger Currency

“Industry has continued to slow -- this probably reflects troubles in European export markets, but may also be due to a strong ruble,” Neil Shearing, chief emerging markets economist for Capital Economics in London, said before the release.

OAO GMK Norilsk Nickel (MNOD), Russia’s largest miner, reduced second-quarter output of nickel by 8 percent from a quarter earlier, the company said in a July 30 statement. U.S. steelmaker Alcoa predicted last month that growth would be slower in Russia as European demand remains uncertain and prices are low.

Accelerating wage growth, slowing unemployment and consumer optimism at the highest level in almost four years are driving private spending, which accounts for half of Russia’s economy.

While “consumption growth is not slowing dramatically, current growth isn’t enough to boost the second-quarter GDP figure,” Vladimir Miklashevsky, an economist at Danske Bank A/S in Helsinki, said by e-mail. “We don’t expect any acceleration in consumption growth as inflation is speeding up.”

Consumer prices grew at the fastest rate this year in July, accelerating 5.6 percent from 4.3 percent the previous month, near the top end of the central bank’s target range of 5 percent to 6 percent.

Standing Apart

The world’s biggest energy exporter is the last major emerging economy to keep borrowing costs unchanged this year. The central bank left the refinancing rate unchanged today at 8 percent, holding it a quarter-point above the record low since December.

Bank Rossii highlighted “significant” inflation risks from a weaker harvest and higher interbank rates that constrain lending growth. The bank dropped wording from last month’s statement that money market rates were at an acceptable level for the “nearest future.”

The government may revise up this year’s economic-growth projection to 3.8 percent to 4 percent, more than the previous 3.4 percent forecast, Economy Minister Andrei Belousov said July 20. GDP grew 3.9 percent in the second quarter, the ministry estimated last month.

Bloomberg