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Russia: Economy cools in Q4 but unexpectedly ekes out growth

April 1, 2015

Economic growth decelerated less than expected in the last quarter of 2014, according to preliminary data published by the Federal Statistics Service (Rosstat) on 1 April. The Russian economy increased 0.4% year-on-year in Q4, which came in below the revised 0.9% expansion registered in Q3 (previously reported: +0.7% year-on-year). That said, markets expected that Russia’s GDP had contracted 0.4% in the last quarter of 2014. Meanwhile, sequential data showed that GDP was flat in seasonally-adjusted terms in Q4 2014, which followed a similar reading recorded in Q3.

The moderation in Q4 was mainly the result of a further contraction in government spending, another decrease in fixed investment and deterioration in the external sector. Exports of goods and services contracted 2.3% annually in Q4, which came in below the 1.3% decrease observed in Q3. Imports plummeted 7.8% over the same quarter of the previous year, which followed the 7.6% contraction registered in the third quarter. Consequently, the external sector’s net contribution to overall economic growth fell from 1.7 percentage points to 1.2 percentage points.

On the domestic front, government spending deteriorated and contracted 0.2% in Q4, which was below the 0.1% decrease tallied in Q3. Fixed investment eased the pace of contraction from a 1.7% decrease in Q3 to a 1.2% contraction in Q4. Conversely, private consumption showed solid growth in the last quarter of 2014, despite the deteriorating economic environment. It increased 1.0% in Q4, which marked an acceleration over the 0.2% rise recorded in the previous quarter.

In 2014, the Russian economy expanded 0.6%, which confirmed a preliminary estimate released in January. The reading came in below the 1.3% expansion recorded in 2013 and represented the worst economic performance since 2009.

The Central Bank expects the economy to contract between 3.5% and 4.0% this year. FocusEconomics Consensus Forecast panelists project Russia’s GDP to contract 4.2% in 2015, which is down 0.1 percentage points from last month’s forecast. Panelists expect the economy to increase a timid 0.5%.


Author:, Senior Economist

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Russia GDP Q4 2014

Note: Year-on-year changes in GDP in %.
Source: Federal State Statistics Service (Rosstat) and FocusEconomics Consensus Forecast.


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