Page 19 - RusRPTOct19

3.0 Macro Economy 3.1 Macroeconomic overview
Russian economic activity did not provide any positive surprises in August, according to the data on base sectors released by Rosstat statistics agency.
Growth rates in year-on-year terms remained unchanged in the industry (2.9% versus 2.8% seen in July) and in construction (0.3% versus 0.2%), while volumes of cargo transportation continued to contract for the second month in a row (-0.7% versus 1.1%).
As reported by bne IntelliNews, the lacklustre economic growth in the first half of this year is expected to speed up in the second half due to increased government spending on National Projects. However, other analysts previously warned that turnaround in the second half of the year may not to materialize.
In August consumer demand continued to display weakness as growth in retail eased further to 0.8% after 1.1% seen in July, with both food and non-food segments slowing down. Agriculture registered the most significant deceleration, with growth slowing to 2.8% from 5.9%.
The latest Central Bank of Russia (CBR) data on the banking sector indeed showed that retail lending growth decelerated to 21.4% y/y in August, the lowest annual rate since August 2018.
The brightest spot in the August statistics was a new, post-Soviet, record low in unemployment, which fell to 4.3% [in August] (versus 4.4% in June-July) driven by seasonality and Russia’s shrinking lab or force.
The State Statistics Service has published a breakdown of Russian GDP growth in 2Q19 by the production approach. Growth came in at 0.9% y/y (unchanged from the preliminary estimate published earlier), with the most growth coming from the financial industry, mining and quarrying, and transportation (0.8 pp combined).
Still, the acceleration in GDP growth from 0.5% y/y in 1Q19 was mostly the result of an improvement in real estate and wholesale and retail trade. While the wholesale and retail trade sector posted a 0.6% y/y decline in 2Q19 (subtracting 0.1 pp from GDP growth), this was significantly better than the 3.0% y/y contraction in 1Q19.
Wholesale trade was primarily what dragged down this sector. Based on the monthly output statistics, which can sometimes deviate from the SNA quarterly figures due to the use of a different methodology, wholesale trade fell by 3.1% y/y, while retail trade increased by 1.5% y/y in 2Q19.
There was also some deviation in the figures for transportation services between the monthly data (up 1.3% y/y in 2Q19) and the quarterly SNA statistics (up 2.9% y/y), as the former is calculated in terms of tonne-kilometers and the latter in terms of gross value added.
19 RUSSIA Country Report October 2019 ww.intellinews.com