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Russia: Russia's GDP shrinks in Q2, outlook for the economy is uncertain

August 10, 2015

Weakness in private consumption and investment likely caused the sharp contraction of the Russian economy in the second quarter of 2015. Moreover, the recent decline in global oil prices and a substantial depreciation of the ruble suggest downside risks for the outlook. According to a preliminary estimate published by the Federal Statistics Service (Rosstat) on 10 August, Russia’s GDP shrank 4.6% in Q2 over the same quarter last year, which came in below the 2.2% contraction registered in Q1. If the preliminary estimate is confirmed, the contraction will be the sharpest in six years. Q2’s decrease was slightly worse than the 4.5% drop the markets had expected. The Economy Ministry had estimated that overall output contracted 4.4% in Q2, calling it “the lowest point” for the Russian downturn.

Although a detailed breakdown of data was not released with the preliminary estimate, high frequency indicators suggest that the contraction was caused by weaker domestic demand, especially private consumption and fixed investment.

The Central Bank expects the economy to contract 3.2% this year. For 2016, the Bank sees that economic growth will depend on the dynamics of oil prices and the economy’s ability to adapt to external shocks. The Bank expects economic growth of 0.7%, in a scenario where oil prices recover and reach USD 70 per barrel, “by late 2016.” In a scenario where oil prices remain at about USD 60 per barrel during 2016, the Bank expects the economy to contract 1.2%. FocusEconomics Consensus Forecast panelists project Russia’s GDP to fall 3.6% in 2015, which is unchanged from last month’s forecast. Panelists expect the economy to expand only 0.5% in 2016.


Author:, Senior Economist

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Russia GDP Q2 2015 0

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


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