Russia: Comprehensive data confirms growth moderated in Q3
December 29, 2017
Detailed data released by the Federal Statistics Service (Rosstat) on 29 December confirmed that economic activity lost steam in the third quarter. GDP expanded 1.8% annually in Q3, in line with the preliminary estimate and below Q2’s 2.5% expansion. Despite the slowdown, the figure marked the fourth consecutive quarter of growth and shows that the economy is firmly on the mend, following a prolonged recession due to low oil prices and international sanctions.
The domestic economy displayed healthy dynamics in Q3, highlighted by a surge in private consumption growth, which hit the fastest rate since Q4 2012. Robust household spending was fueled by an improving labor market and historically low inflation. Private consumption expanded 5.2% annually, above Q2’s 4.4% increase. Government consumption growth inched up from 0.5% in Q2 to 0.6% in Q3. Fixed investment growth remained robust, despite losing steam from Q2’s nearly five-year high of 6.3%. Fixed investment grew a healthy 3.9% in Q3, aided by lower interest rates; however, falling housing prices likely dented property investment.
The external sector improved in the third quarter, as higher commodities prices and a favorable external backdrop boosted export growth from 3.3% in the second quarter to 4.5%. Imports, conversely, lost steam, expanding 16.3% (Q2: +20.7%).
Looking ahead, the economy should remain on a moderate growth path thanks to recovering confidence, low inflation, higher oil prices and looser monetary policy.
Russia GDP Forecast
FocusEconomics panelists see GDP growing 1.9% this year, unchanged from last month’s projection. For 2019, panelists see GDP increasing 1.8%.