Page 6 - RusRPTSept21

1.0 Executive summary
Russia’s economy expanded by 4.7% in June as the economy continues to stabilise. The Russian economy continued to normalize on a y/y basis, although many sectors have begun to see stagnation, the housing market being an exception.
The GDP growth rate slowed to 4.7% y/y in July vs. 10.3% y/y in 2Q21, according to the Ministry of Economic Development. The prints from many sectors were worse than consensus expectations on the production side, while incomes and unemployment both improved thanks to higher profits that translated to better paychecks.
Analysts expect the momentum to fade in 2H21 as consumption stabilizes following the spending of excess savings, as well as due to lower loan growth, although social disbursements could delay this process for a month or so. With the worse-than-excepted prints, analysts see a risk that FY21 growth forecast of 4.8% y/y drops to 4.5% y/y.
Russia's economy recovered from last year's recession, but the pace of recovery of the sectors differed considerably
The economy has recovered from the pitfall of spring 2020 and the recovery has continued gradually in recent months. In the first quarter of this year, GDP was already slightly higher than two years earlier (i.e. in the first quarter of 2019) and in the second quarter, growth from two years ago was estimated by the Ministry of Economy at about 1.5%.
The economic recovery has varied across the main sectors. Production in the extractive industries has recovered significantly, to just under 2% less in the second quarter than two years earlier. Under OPEC +, crude oil production has gradually climbed back to pre-recession levels last year, down 6% from two years ago in the second quarter. Natural gas production was a few% higher than two years earlier. In the various services supporting oil and gas production, which form a slightly larger sector of the extractive industry than natural gas production, growth was more than 20% from two years ago.
Production in the processing industry has recovered quite well, being about 5.5% higher in the second quarter than two years ago (7% in the first quarter). Growth has been very broad-based. Among the six major processing industries, growth from two years ago was 7-8% in the food industry, more than 13% in the chemical industry, more than 30% in the metal products industry and 7% in the machinery and equipment sectors. Of all the processing
6 RUSSIA Country Report September 2021 www.intellinews.com