Russia GDP Q4 2019

Russia: Second estimate confirms sturdier growth in Q4 2019

A detailed breakdown of fourth-quarter national accounts data released by Rosstat on 1 April, confirmed that the economy gained traction at the end of last year. Annual growth accelerated to a one-year high of 2.1% in the quarter, up from the third quarter’s 1.5% year-on-year increase. That said, the economy grew at the weakest pace in three years in 2019 as a whole (2019: +1.3%; 2018: +2.5%), as a weaker external backdrop more than offset sturdier domestic activity.

The fourth-quarter pick-up was spearheaded by booming investment activity: Fixed investment growth soared to an over two-year high in the period (Q4: +12.1% yoy; Q3: +3.2%) as the government’s “national projects” infrastructure program gained speed. On the consumption side, heathy metrics were largely sustained in Q4. Household consumption growth remained unchanged at the previous quarter’s 2.5%, amid slowing inflation and still-downbeat confidence, whereas public spending growth was stable at the third quarter’s two-year high of 2.3%.

In the external arena, the picture was considerably bleaker. Exports contracted for the fourth consecutive quarter at the end of 2019 (Q4: -2.5% yoy; Q3: -0.8%) as the external backdrop weakened amid lingering trade uncertainties, soft demand for energy products and a slowing global economy. Imports growth meanwhile jumped to a two-year high in the final quarter of last year (Q4: +10.1% yoy; Q3: +4.5%), leading to a marked deterioration in the external sector’s contribution to the overall outturn.

Looking ahead, economic activity is set to be severely hit this year as the Covid-19 pandemic severely dampens both domestic and external demand, disrupts supply chains and depresses global energy prices. That said, the economic impact of the pandemic remains highly uncertain with significant volatility in outlook expected in the months ahead.

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