Page 22 - RPTRusFeb17

3.1 Macro overview
In January, both production and demand-side indicators showed further signs supporting our above-consensus 1.7% GDP growth forecast for 2017 .
The first monthly data of this year showed more signs that Russia is expected to enjoy a broad macro recovery in 2017 with a consensus of 1.2% of growth.
The production side remained healthy, with industrial production up 2.3% y/y. The production of certain domestic demand-oriented manufacturing items showed major increases, including road vehicles, computers and knitted clothing (70% y/y); tractors, tyres and shoes (30% y/y); washing machines and fabric (20% y/y) etc.
The demand side also showed positive developments. The contraction in retail sales growth moderated to 2.3% y/y, vs the Bloomberg consensus (-5.1%). Real wages remained strong (3.1% y/y vs the consensus 2.0%, while real incomes turned positive (8.1% y/y; the strongest print since 2013, though likely to be an outlier). The unemployment rate has increased slightly to 5.6%.
3.2 Macro outlook
The European Commission has improved the forecast for GDP growth in Russia in 2017 to 0.8% i nstead of the previous forecast of an increase of 0.6%, reports Prime. The forecast for Russia's GDP for 2018 was also improved - up 1.1% from the previous 0.8%. The forecast was improved after the stabilization of oil prices and the ruble. EC Analysts expect that the Russian economy will go growth in both 2017 and 2018, although the increase will be at a moderate pace. According to the EC forecasts, the unemployment rate in Russia in 2017 will
22 RUSSIA Country Report February 2017 www.intellinews.com