Russia economy ministry cuts growth forecast due to planned tax hike - source

MOSCOW, June 27 (Reuters) - Russia's economy ministry has cut its economic growth forecasts, citing a planned increase in value-added tax and the central bank's tight monetary policy, a government source said on Wednesday.

The economy ministry now expects gross domestic product (GDP) to grow by 1.4 percent in 2019 compared with the 1.9 percent growth projected for this year, the source familiar with the new set of forecasts said.

In forecasts released in the second half 2017, the economy ministry had anticipated GDP growth of 2.1 percent and 2.2 percent in 2018 and 2019, respectively.

The Bank of Russia said this month the room for lower rates had shrunk after a government proposal to raise value-added tax to 20 percent from 18 percent. The central bank warned higher taxes would translate into inflation.

The source also said the economy ministry expected the Russian rouble to average around 61 versus the dollar this year, weakening to an average of 63-64 in 2019. This compares with 63.07 on Wednesday afternoon.

The economy ministry did not immediately reply to a request for comment. (Reporting by Polina Nikolskaya and Darya Korsunskaya; Writing by Andrey Ostroukh; Editing by Christian Lowe and Mark Potter)