Russia: Second estimate confirms slowdown in growth in Q1 amid looming recession ahead
The second GDP estimate released by Rosstat on 18 June confirmed that annual growth slowed to 1.6% in the first quarter of 2020. This followed the previous quarter’s 2.1% expansion and was chiefly driven by a shock from the Covid-19 pandemic and associated containment measures that began to constrain activity in March. Moreover, growth fell to a one-year low of 0.3% in quarter-on-quarter and seasonally-adjusted terms (Q4 2019: +0.5% qoq).
The first-quarter moderation largely reflected contracting activity in the mining, electricity supply and transportation sectors. That said, still-healthy output growth in the manufacturing, retail and wholesale trade, and financial sectors softened the overall downturn.
Looking ahead, the economic panorama is grim. Covid-19 is battering domestic activity and foreign demand, with the largest GDP contraction most likely concentrated in Q2. Contracting investment activity and crumbling consumer demand are seen spearheading the downturn in domestic demand through year-end, while low global oil prices and compromised supply chains will likely hammer the country’s exports.