Russia: GDP contracts again in the third quarter
According to a second estimate, GDP contracted 3.7% year on year in the third quarter, marking an upward revision from the preliminary data that pointed to a 4.0% downturn. This comes on the heels of Q2’s 4.1% fall and indicates that the economy has entered a recession, triggered by the economic fallout from Russia’s invasion of Ukraine.
Looking at the sector breakdown, a softer decrease in the manufacturing sector and stable activity in the mining and quarrying sector underpinned a milder overall contraction in GDP in Q3. That said, retail and trade activity contracted at a sharper pace in the quarter, suggesting that private spending increasingly felt the pinch of slowing demand.
On a seasonally-adjusted quarter-on-quarter basis, GDP rose 0.4% in Q3, rebounding from the previous quarter’s sharp 5.2% contraction.
Economic prospects remain bleak heading into the final quarter of 2022 and 2023. The growing cost of the war in Ukraine will likely keep the economy in recession through end-2023 amid enduring international sanctions, waves of mobilization and a capital exodus from the country. Moreover, lower global energy prices, a cap on Russian oil prices and much-reduced natural gas shipments to Europe bode ill for the external sector.