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Russia: Russia's economy in Q2 plunges to lowest level in six years

October 1, 2015

Russia’s economy in the second quarter contracted at the fastest pace since Q3 2009, which reflected a broad-based deterioration. According to more complete data published by the Federal State Statistics Service (Rosstat), GDP decreased 4.6% annually in Q2. The reading matched a contraction reported in a flash estimate and followed the 2.2% decline registered in the first quarter.

A detailed breakdown of data by type expenditure showed a broad-based deterioration. Total consumption declined 6.3% annually in Q2 (Q1: -6.4% year-on-year) due to an 8.7% decrease in private consumption (Q1:+9.0% yoy) and a flat growth in government spending (Q1: -0.1% yoy). In addition, gross fixed investment plunged 7.4% in Q2, which followed an 8.8% decrease in Q1. On the external front, exports of goods and services increased 1.4% in Q2 over the same period last year, which was down from a 4.5% rise in Q1. Imports plummeted 29.9% in the second quarter, which was faster than the 25.0% contraction tallied in Q1. The contribution to overall economic growth from net exports fell from 7.1 percentage points in Q1 to 6.8 percentage points in Q2.

Sequential data showed that GDP decreased a seasonally-adjusted 2.0% in Q2 over the previous quarter, which came in below the 1.6% contraction seen in Q1.The quarterly contraction was the steepest since Q1 2009.

In its assessment of the economy, the Central Bank stated in September that it expects the economy to contract at a rate of between 3.9% and 4.4% this year. For 2016, the Bank sees that economic growth will depend on the dynamics of energy prices and the economy’s ability to adapt to external shocks. The Bank expects the price for Urals oil to average USD 50 per barrel in the next three years. As result, the Bank sees a more protracted recession. It expects the economy to contract at a rate of between 0.5% and 1.0% in 2016. FocusEconomics panelists expect Russia’s GDP to fall 3.7% in 2015, which is unchanged from last month’s forecast. Panelists expect the economy to expand only 0.4% in 2016.


Author:, Senior Economist

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Russia GDP Q2 2015

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


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