* Analysts and government expected higher growth
* Russia saw recession in previous two years
* Reuters poll sees GDP up 1.9 pct in 2018
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By Polina Nikolskaya and Zlata Garasyuta
MOSCOW, Feb 1 (Reuters) - The Russian economy grew by 1.5 percent last year, recovering from losses in previous years, but the growth was less than expected, preliminary Federal Statistics Service data published on Thursday showed.
Russia's oil-dependent economy was on the mend in 2017 after two years of recession, triggered by a sharp drop in global commodity prices and sanctions imposed by Western countries against Moscow for its role in the Ukrainian crisis.
A Reuters poll of analysts and economists expected growth of 1.7 percent last year and 1.9 percent in 2018. Russian gross domestic product contracted by 0.2 percent in 2016.The economy ministry had expected growth of 2 percent or more in 2017. But the economy unexpectedly contracted in November, hit by a drop in industrial production, which fell 3.6 percent compared with a year earlier. The economy ministry attributed the drop to warm weather which depressed demand for natural gas and by the deal on a global oil production cut, led by Russia and Saudi Arabia.
"The annual growth figure masks what was a year of two halves for Russia's economy. Growth gathered pace in the first half of 2017, hitting a peak of 2.5 percent, y/y, in Q2. But it subsequently slowed," analysts at Capital Economics said in a note.
"We think some of the factors that dragged growth down in the second half of 2017 - including lower oil production and weakness in parts of the manufacturing sector - will fade this year," they said, expecting growth this year of 2.5 percent.
A further cut in the key rate is expected in 2018. President Vladimir Putin, in power since 2000, is widely expected to win another term in a March 18 election.
Central bank Governor Elvira Nabiullina said on Thursday there was room for further monetary policy easing, adding that the rate could be either cut or put on hold at a Feb. 9 board meeting. "The key rate may end 2018 near 6.5-6.75 percent depending on the speed of the CPI recovery and post-elections economic agenda," ING bank said.
Analysts and economists polled by Reuters in late January said they expected a small rate cut at the next meeting, from a current 7.75 percent. (Reporting by Polina Nikolskaya and Zlata Garasyuta; Editing by Katya Golubkova and Andrew Roche)
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