Russia: Economy slows on weaker domestic demand
October 1, 2013
In the second quarter, GDP expanded 1.2% over the same period last year, according to revised estimates published on 1 October. The reading was below the 1.6% growth recorded in Q1 and confirmed the results of the preliminary estimate released on 6 September. In addition, the second quarter result marked the lowest reading since Q4 2009.
The deceleration was driven by a slowdown in domestic demand, whereas the external sector improved compared to the previous quarter. Private consumption rose 5.5% over the same period last year (Q1: +6.1% year-on-year), while government consumption contracted 0.2% in annual terms (Q1: +0.5% yoy). Finally, fixed investment dropped 2.5%, contrasting the 0.1% increase recorded in Q1.
Meanwhile, exports of goods and services expanded 4.1% in the second quarter (Q1: +0.4% yoy), while imports rose 1.4% (Q1: +4.9% yoy). As a result, the external sector's net contribution to overall economic growth swung from minus 0.9 percentage points in Q1 to plus 0.9 percentage points in Q2.
On quarter-on-quarter basis, GDP dropped a seasonally adjusted 0.3% in Q2, in line with a contraction of the same magnitude in the previous quarter.
The government expects the economy to grow 1.8% in 2013. The government believes that the economy will grow 3.0% in 2014. FocusEconomics Consensus Forecast panelists expect GDP to grow 2.3% in 2013, which is unchanged from last month's forecast. Next year, the panel sees the economy growing 2.9%, which is also unchanged from last month's projection.
Author: Armando Ciccarelli, Head of Data Solutions