Russia: Economy rebounds in 2010
January 31, 2011
According to the flash estimate published by the Federal State Statistics Service (Rosstat) on 31 January, GDP grew 4.0% in the full year 2010. The result contrasted the 7.8% contraction recorded in 2009 and was in line with Consensus Forecast panellists' expectations. Economic growth was driven by stronger domestic demand, as both consumption and investment recovered compared to 2009. Private consumption increased 2.1% for the full year 2010 (2009: -3.7%) while fixed investment expanded 3.5% (2009: -14.4%). Meanwhile, the contribution of the external sector to overall growth deteriorated compared to the previous year, as imports grew faster than exports. Exports were negatively affected by the ban on grain exports, implemented last August by the government to hold domestic corn price increases in check after a severe summer drought had destroyed large parts of the harvest. Exports expanded 11.1% in the full year 2010 (2009: -4.7%) while imports rebounded strongly, increasing 25.4% (2009: -30.4%). At the sector level, the recovery was driven by strong growth in the industrial sector and a moderate expansion in the services sector. Adverse weather conditions during the summer dented the agricultural sector, which contracted 11.7%, marking the most severe drop in the last 10 years. Based on full-year figures, the economy should have grown 4.9% in the fourth quarter, which if confirmed would mark the strongest quarterly performance since the third quarter of 2008. The Ministry of Economic Development expects the economy to expand 4.2% in 2011. In 2012, the Ministry sees economic growth moderating to 3.9%. Consensus Forecast panellists share the government's assessment and see the economy expanding 4.3% this year, which is down 0.2% percentage points from last month's forecast. Next year, the panel expects the economy to expand at the same 4.3% clip.
Author: Armando Ciccarelli, Head of Data Solutions