Page 26 - RusRPTAug20

3.0​ ​Macro Economy 3.1 ​Macroeconomic overview
The Ministry of Economic Affairs estimates that GDP was 6.5% lower in June ​than a year earlier, after about 11% lower in April-May. The lifting of restrictive measures related to the corona epidemic contributed to the recovery of economic activity.
Household demand increased from the previous month as people returned to work. In June, the volume of retail trade contracted by 7.7% year-on-year, while in April – May the annual change in retail trade was about −20%.
According to the statistical authority Rosstat, the seasonally adjusted sales volume in June was about 20% higher than in April, which means that the recovery has been relatively fast in this sense. On the other hand, retail sales were still almost 10% lower than at the beginning of the year, which means that the conditions prevailing before the corona epidemic are still a long way off.
It should be noted that the recovery in trade was strongest in foodstuffs, where the annual change in sales was −3.7% in June. Sales of other products decreased by a further 11% year-on-year.
The economic recovery is also reflected in construction, for example. In June, the volume of construction was already at the same level as a year earlier. The contraction in industrial production eased somewhat, but the change from a year earlier was still −9.4%. The decline in production in the oil industry was reflected in pipeline transport, which fell by almost 15% year-on-year in June. In rail transport, the decline was more than 4%.
The depth of the interest rate crisis is also reflected in the labor market and household income. In the second quarter, real disposable income fell by as much as 8% year-on-year. Thus, the real income level was lower than for more than a decade. Even if economic activity and household incomes recovered in the coming quarters, Russians' incomes had not recovered to 2014 levels even before the crisis. As incomes fall, households are e.g. increased their borrowing to sustain consumption. In the second quarter of this year, lending to households increased by 12.6% year-on-year.
In many Russian industries, on-year production continued to decline significantly in May​. The nadir of the corona crisis, however, seems to have been reached in April. Most sector output showed slight (seasonally adjusted) increases in May from April.
The service sector, in particular, continued to suffer from the effects of Russia’s coronavirus lockdown. Even if Russia began to gradually relax restrictions to prevent spread of the virus in May, retail sales were still down by 19% y/y. Industrial output continued to decline, down by 10% y/y in May. Much of the fall in output reflects drops in oil & gas production. Russian crude oil production was down by almost 15% y/y in May after the new OPEC+ production ceiling agreement entered into force at the beginning of the month.
26​ RUSSIA Country Report​ August 2020 ​ ​www.intellinews.com