Russia: Growth jumps to year-to-date high in Q3
November 13, 2019
GDP growth accelerated to 1.7% year-on-year in the third quarter of 2019, according to a preliminary estimate released by Rosstat on 13 November. This was nearly double the second quarter’s 0.9% expansion and marked the best result so far this year, coming in line with the expectations of most market analysts.
While a breakdown by components has not yet been made available, an upturn in agricultural output and upbeat activity in the all-important industrial sector appear to have spearheaded the overall expansion. That said, despite falling inflation and considerable monetary policy easing by the Central Bank, consumer demand appears to have remained subdued in Q3, reflected by slowing retail sales amid an uptick in the unemployment rate and downbeat consumer sentiment. Lastly, dynamics on the external front remained bleak in Q3, as merchandise exports fell at the sharpest pace in three years against the backdrop of faltering commodity prices.
Commenting on the release, Dmitry Dolgin, chief economist at ING Russia, noted that short-term prospects remain muted:
“Rosstat provided no details regarding the composition of GDP growth, but there are several considerations which raise questions about the sustainability of 3Q19 growth rates for the near term. […] We continue to see 4Q19 GDP growth in a 1.0-1.5% range, with the 2019 figure around 1.0% YoY, unless some backward-looking statistical revisions take place. Some acceleration to 1.5% is possible in 2020 provided there is an increase in budget spending. […] Additional support may come from the planned RUB1.0 trillion of local investments from the National Wealth Fund over the next three years, including RUB 0.2-0.3 trillion in 2020, provided the government will successfully allocate it.”
A comprehensive estimate of national accounts will be released on 12 December.
Author: Almanas Stanapedis, Economist