Russia: Growth gains further momentum in Q2
A second estimate of national accounts data released by Rosstat on 10 September shows that the economic recovery gained further steam in the first quarter, following a sharp slowdown at the end of last year. GDP rose 1.9% over the same quarter last year, which was 0.1 percentage points higher than the preliminary estimate of 1.8% year-on-year growth released on 13 August. Q2’s print was above Q1’s 1.3% expansion.
A breakdown by industry revealed that a strengthening in the industrial sector—led by faster growth in extraction and manufacturing activity—was chiefly responsible for the acceleration in Q2. The services sector also contributed positively to growth, on the back of faster expansions in the accommodation and catering sectors; transport and storage; and financial and insurance activities. Firmer commodity prices likely underpinned the mining sector, while supportive monetary policy fueled broader momentum. Conversely, activity in the real estate sector swung from solid growth in the first quarter to contraction in the second, weighing on growth within the construction sector which slowed considerably from Q1.
Moving forward, a solid labor market and low inflation should underpin household spending, and rising oil production and firmer oil prices are expected to support export growth and thus sustain the economy this year. That said, high geopolitical uncertainty and the possibility of further economic sanctions remain key risks to the outlook.