Russia: GDP growth slows in Q1
According to a preliminary estimate released by Rosstat on 19 May, GDP grew 1.6% in annual terms in Q1 2020, decelerating from Q4 2019’s 2.1% expansion. Although the breakdown by components is not yet available, the slowdown was seemingly driven by softer industrial output growth and contracting exports, amid nosediving global crude oil prices at the end of Q1.
Russia’s outlook appears increasingly bleak, as the pandemic is set to wreak increasing havoc on the economy, with our panel projecting a sharp recession from Q2 2020 onwards. Domestic demand will plunge on evaporating investment activity and falling household spending due to social distancing measures and a weaker ruble. Externally, depressed oil prices and compromised trade links are set to sink exports.
Commenting on the outlook, Anatoliy Shal, economist at JPMorgan, noted:
“In Russia, restrictions related to COVID-19 tightened significantly only by the end of March, hence the lesser impact on Q1 numbers. But Q1 is obviously just a prelude to collapse in activity in 2Q […] Available data on electricity consumption, transport turnover, oil output and refining, and on sectoral financial flows suggest that commodity sectors—a backbone of Russian economy—fared okay in April […] We keep our forecasts unchanged for now, anticipating a ~40% qoq saar decline in Q2 and a 5.2% you contraction for the full year.” enter text.