Page 34 - RusRPTSept21

normalize as Russians use up their excess savings and as outbound tourism restarts, especially to Turkey and Egypt. Finally, the tapering of the subsidized mortgage program and a tighter monetary policy should offset elevated consumption and credit demand, Sova Capital predicts.
“Support for consumption should come from stronger incomes, which still have room to improve vs. pre-COVID-19 levels (disposable incomes are still 0.8% below 2Q19). We also expect a further recovery in the energy sector amid OPEC+’s easing of production constraints and greater activity in the services sector as the third wave of COVID-19 fades,” Sova Capital said.
“Going into 2H21, we expect growth to slow to 0.7% SA q/q in 2H21, the same rate as in 2018-19, which is still higher than our estimate (2% y/y). As a result, we expect GDP to grow 5.2% y/y in 3Q21 and 4.6% y/y in 4Q21, and we forecast an FY21 growth rate of 4.8% y/y, which is better than the recently revised CBR projection (4-4.5% y/y) and our previous estimate of 3.4% y/y,” the bank concluded.
Rosstat’s preliminary GDP growth estimate for 2Q21 (10.3% YoY) appeared to be better than both market and Ministry of Economic Development expectations.
As a result, Russia’s GDP was up 1.3% vs. 4Q19, although it is still 3ppts below pre-COVID-19 trend levels. Going into 2H21, we expect growth to slow to 0.7% SA QoQ in 2H21, the same rate as in 2018-19, which is still better than the long-term potential (2% YoY, or 0.5% SA QoQ). As a result, we expect GDP to grow 5.2% YoY in 3Q21 and 4.6% YoY in 4Q21, and we forecast a FY21 growth rate of 4.8% YoY, which is better than the recently revised CBR projection (4-4.5% YoY) and our previous estimate of 3.4% YoY.
On Friday, 13 August, Rosstat released its preliminary GDP growth estimate for 2Q21. The estimate was 10.3% YoY, which is better than our (9.6% YoY), market (10% YoY) and Ministry of Economic Development (10.1% YoY) expectations. The estimate is based on the production approach, which uses data from large and mid-sized enterprises in the non-financial sector.
According to Rosstat, which disclosed no additional details, the 2Q21 GDP estimate was largely influenced by the rebound in almost all industries, with manufacturing up 11.4% YoY, construction up 10.7% YoY, and mining and quarrying up 7.8% YoY. Both wholesale and retail trade showed significant accelerations to 19.8% YoY and 23.5% YoY, respectively, while freight and passenger turnover picked up 9.9% YoY and 250% YoY, respectively.
GDP was up 1.3% in 2Q21 vs. 4Q19, and the QoQ growth rate appeared to be
34 RUSSIA Country Report September 2021 www.intellinews.com