Russia GDP

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Russia: Russian economy contracts less than expected

May 15, 2015

Many economic analysts were expecting that Western sanctions, a sharp fall in the Russian ruble and high financing costs could cause a collapse of the Russian economy at the beginning of 2015. However, a preliminary estimate released by the Federal Statistics Service (Rosstat) on 15 May showed that Russia’s Q1 GDP contracted 1.9% over the same quarter last year. Q1’s result followed a lackluster 0.4% expansion in Q4 2014 but came in stronger than the average 2.6% decrease that the markets had expected. Although the Q1’s print was stronger than expected, it represented the first contraction since Q4 2009.

Although a detailed breakdown of data was not released with the preliminary estimate, additional economic information suggests that the more modest than expected decline reflected weaker domestic demand, especially private consumption and fixed investment, but a healthier contribution from net exports to overall growth from a contraction in imports. On the production side, agriculture, manufacturing output and mining fared better than services.

The Central Bank expects the economy to contract between 3.4% and 4.0% in 2015. Meanwhile, the Russian government expects the economy to contract 3.0% in 2015 and to rebound in 2016 with an expected 2.3% expansion. FocusEconomics Consensus Forecast panelists project Russia’s GDP to fall 4.2% in 2015, which is up 0.1 percentage points from last month’s forecast. Panelists expect the economy to expand only 0.4% in 2016.


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Russia GDP Q1 2015

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


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