Russia: Growth slides in Q4
April 3, 2018
A comprehensive estimate of national accounts data released by Rosstat on 3 April confirmed that the Russian economy rebounded last year, with GDP rising 1.5%, unchanged from the preliminary estimate released on 2 February (2016: -0.2%). In the same release, Rosstat unveiled GDP data for Q4 2017, as well as revisions to Q1–Q3 2017 national accounts data. The new figures showed that growth slowed notably in the fourth quarter, with GDP expanding 0.9% annually, a significant slowdown from the third quarter’s revised 2.2% expansion (previously reported: +1.8% year-on-year).
Inventories subtracted from growth in the fourth quarter, primarily driving the slowdown in GDP growth. In addition, fixed investment lost steam, increasing 3.4% annually in Q4, down from Q3’s 4.0% rise. The economy is still weathering the effects of low oil prices, limited oil output and economic sanctions, which has caused the recovery to be sluggish so far. However, private consumption growth inched up from 4.2% in Q3 to 4.3% in Q4, a resilient reading likely supported by low inflation in the quarter. Government consumption was stable at Q3’s 0.4% expansion in Q4.
Exports gained momentum in the fourth quarter, rising 5.2% over the same period of the previous year (Q3: +4.7% year-on-year). The Ural oil price rose throughout the quarter, while healthy global growth is also helping shore up overseas sales. Meanwhile, import growth decelerated in the fourth quarter to 15.4%, below the third quarter’s buoyant 17.1% rise.
Looking ahead, the recovery is expected to modestly gain steam this year on the back of monetary policy easing, higher oil prices and healthy household consumption. However, the production cut deal with OPEC, along with fiscal tightening, will keep oil output limited.
Russia GDP Forecast
FocusEconomics Consensus Forecast panelists project that Russia’s GDP will increase 1.8% in 2018, which is unchanged from last month’s forecast. Panelists expect the economy will also expand 1.8% in 2019.