Page 46 - RusRPTJan21

3.0​ ​Macro Economy 3.1 ​Macroeconomic overview
Rosstat released its first estimate of GDP by production, revising its 3Q20 contraction from 3.6% y/y as per preliminary estimates to 3.4% y/y (vs. a contraction of 8% y/y in 2Q20) on December 14.
On an industry-wide basis, most sectors saw either lower declines or even accelerations. The most depressed segments remained mining and quarrying (-12.3% y/y) due to lower oil production, as well as accommodation and food services (-25.9% y/y), transportation and storage (-9.6% y/y) and arts, entertainment and recreation (-14.9% y/y), all of, which remained vulnerable to COVID-19.
At the same time, there were significant improvements in manufacturing, which showed zero growth rates (vs. a contraction of 7.9% y/y in 2Q20), as well as in wholesale and retail trade (-1% y/y in 3Q20 vs. -12.7% y/y in 2Q20).
The only sector that continued to post higher growth rates was finance and insurance, up 8% y/y in 3Q20 after growing 6.1% y/y in 2Q20 thanks to an influx of retail clients. According to MOEX data, nearly 1.4mn (+27% q/q) Russians opened brokerage accounts in 2Q20.
The Russian economy started to recover in 3Q20 from the lockdown shock of 2Q20. The 3Q20 recovery came on the back of the domestic economy reopening (e.g. retail sales, services consumption and transportation) and the corresponding rebound in production.
Russia’s economic performance in 4Q20 will likely be worse than in 3Q20 as the COVID-19 situation worsens, acting as a drag on mobility and services consumption.
Many regions are reinstating restrictions to discourage people from visiting shopping malls and other public spaces.
The October GDP proxy plunged to -4.7% y/y in October from -3% y/y in September.
Sova Capital remains comfortable with its FY20 GDP forecast of a 3.5% y/y decline, as the second wave of COVID-19 has forced it to acknowledge downsides to our 4Q20 forecast of a 4% y/y contraction, revising it to a drop of 4.2% y/y. The deteriorating epidemiological situation leads to downside risks to our 2021 forecast of GDP rebounding to a growth of 2.8% y/y, while the mass
46 ​RUSSIA Country Report​ January 2021 ​ ​www.intellinews.com