Russia: Tentative recovery in sight
November 14, 2016
Preliminary data released on 14 November provided further evidence that the Russian economy’s deep recession has bottomed out. GDP decreased 0.4% year-on-year in Q3, which was less negative than the 0.5% decline that the markets had expected. Q3’s result followed a 0.6% contraction in Q2 and represents the slowest decrease since the economy began to contract at the beginning of 2015.
Although the Statistical Office did not release a detailed breakdown of data, additional economic information suggests that investment and the external sector continued their gradual recovery. Moreover, as inflationary pressures subsided in Q3, an improvement to real wages likely underpinned household spending. Meanwhile, unlike in Q2, the improvement seen in Q3 occurred without the support of any statistical base effect and was also buttressed by higher government spending, since additional data related to budget spending increased 1.0% year-on-year in Q3 after having declined 9.0% and 21% in Q2 and Q1, respectively.
Author: Ricardo Aceves, Senior Economist