Russia GDP Q2 2021

Russia: GDP growth revised upwards for Q2 but momentum seems to be waning in Q3

The economy grew 10.5% year-on-year in the second quarter of 2021, according to a second national accounts estimate. Although the result came in above the preliminary estimate of a 10.3% expansion and marked a significant rebound from the 0.7% contraction recorded in Q1, it was flattered by a base effect. Meanwhile, on a seasonally-adjusted quarter-on-quarter basis, GDP jumped 3.5% in Q2, accelerating from Q1’s 1.0% increase and marking the best result since our records began in 2003.

Although a breakdown of expenditure-side components is not yet available, the recovery was likely broad-based as the release of pent-up consumer demand should have boosted domestic activity, while healthier foreign demand seems to have underpinned a solid performance in the external sector.

Commenting on the GDP outlook for H2, Artem Zaigrin, chief economist at SOVA Capital, said:

“The pace of expansion has slowed since the economy reached pre-Covid-19 levels [in Q2]. Consumer activity, driven by excess savings and a lack of outbound tourism, should start to wane in H2 2021, and credit demand should drop due to higher interest rates. Factors that could keep consumer activity on the recovery path for some time are additional one-off payments to pensioners and members of the military and law-enforcement agencies in September. Stronger profit generation could also keep the gradual expansion in income untouched. With worse-than-excepted prints, we see a risk that our FY 2021 growth forecast of 4.8% yoy drops to 4.5% yoy.)

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