Page 35 - RusRPTNov20

in August.
GDP recovery coming from commodity sectors​. The Ministry of Economic Development’s proxy estimates point to the decline in GDP narrowing further to 3.3% YoY in September from 3.7% YoY in August, posting overall declines of 3.8% YoY in 3Q20 and 3.5% YoY in 9M20. The better performances of the mining industry and transportation had the greatest impact, while the recoveries in manufacturing and retail sales reached the limits of their improvement. The revision of IP data also supported an upgrade of 0.6ppts in August.
Commodities, not consumption driving growth. ​The September data shows that positive trends in commodity-oriented sectors continue to drive the recovery, while industries focused on domestic demand are about to reach their recovery limits. The released data points to upward risks to our estimated 3Q20 GDP drop of 5.6% YoY, while the surge in COVID-19 cases points to downside risks to our scenario of a decline of 3.2% YoY in 4Q20 GDP, which could lead to some upside risks to our FY20 GDP forecast of a 4% YoY decline. If epidemiological restrictions are non-binding, the decline in FY20 GDP could be 3.5-3.7% YoY, on our estimates.
Rosstat issued GDP by consumption for 2Q20, reiterating its previously revised estimate of ​8.0% y/y. ​Household consumption was down ​22.2% y/y, contributing ​11.2pp to the headline growth number. Government consumption was up +1.6% y/y, investment (GFCF) decreased ​11.7% y/y, export volumes increased +0.3% y/y and imports declined ​22.2% y/y in real terms. We estimate the contribution of net exports to GDP growth at +4.2pp.
The corona epidemic collapsed Russian private consumption.​ In the second quarter, Russia's GDP contracted by 8.0% year-on-year, while GDP grew by a further 1.6% in the first quarter. The corona epidemic and related restrictive measures severely taxed domestic demand. The annual change in private consumption was as high as −22% and for fixed investment −12%.
Seasonally adjusted, Russia's GDP contracted by 3.2% in the second quarter from the previous quarter. Overall, GDP contracted by 4.1% in the first half of the year, which was very low by international standards. There is not a single country in Europe whose GDP has fallen so little in the first half of the year. For example, in Finland and Lithuania, which have so far survived the corona pandemic with the least economic damage in Europe, GDP contracted by more than 5%. The Russian economy has been favored by e.g. the structure of the economy, in, which small service companies and tourism play a smaller role than in many other countries. The decline in GDP in Russia was also smaller than in the 2009 crisis.
Russia's GDP growth in the second quarter was supported in particular by the
35 ​RUSSIA Country Report​ November 2020 www.intellinews.com