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Russia: GDP slows in first quarter, meets primary estimate

May 22, 2014

According to final data released by the Federal State Statistics Service (Rosstat) on 3 July, the Russian economy expanded 0.9% over the same period last year in the first quarter, thus confirming the flash estimate released on 15 May. The print came in at less than half of the 2.0% rise tallied in the fourth quarter. The economy contracted 0.4% over the previous quarter in seasonally-adjusted terms in Q1, which contrasted the 0.3% expansion recorded in Q4 2013.

Q1’s deceleration was driven by a deterioration in both the domestic and the external sides of the economy. Domestic demand registered the slowest expansion in more than four years (Q4 2013: +0.8% year-on-year; Q1 2014: +0.1% yoy). Private consumption continued to expand, rising 3.7% annually in Q1, which was down from the 4.1% rise in Q4. Government consumption also deteriorated from a 0.4% expansion in Q4 to a 0.1% contraction in Q1. The deterioration in domestic demand, however, was mainly caused by a sharp contraction in fixed investment (Q4: +0.5% yoy; Q1: -7.0% yoy). The drop in fixed investment reflected the political instability that the country faced in the first months of the year when the conflict with neighboring Ukraine prompted strong capital flights (see chart).

The external sector also deteriorated in Q1. Exports continued expanding, although at a slower pace than in the previous quarter (Q4: +5.6% yoy; Q1: +1.6% yoy). Imports contracted at a sharp 4.5% in Q1, which was down from the 0.1% decrease seen in Q4. As a result, the external sector’s net contribution to GDP growth fell from 1.8 percentage points in Q4 to 1.6 percentage points in Q1.

The government estimates that the economy will grow at either 0.5% (assuming no policy stimulus) or 1.1% (assuming fiscal stimulus). FocusEconomics Consensus Forecast panelists expect the economy to expand 1.0% this year, which is down 0.2 percentage points from the previous month’s estimate. For 2015, the panel sees the economy growing 1.9%.


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Russia GDP Q1 2014 0

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


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