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June 28, 2019 www.intellinews.com I Page 7
Russia demand expands in May, albeit slowly, labour force shrinks
bne IntelliNews
Russia’s economy is growing, albeit slowly, VTB Capital (VTBC) said in a note following the release of May’s statistics by Rosstat.
The first tier data for May shows that retail sales were up +1.4% y/y, with the turnover in the food and non-food segments increasing modestly +1.7% y/y and +1.0% y/y, respectively.
Real wages have been stagnating for almost six years now and real wages growth decelerated again from +3.1% y/y in April to +2.8% y/y in May. However, economists warn that these flash estimates tend to be revised.
And despite a surge in completion in the resi- dential sector, up by almost 30% in the first quarter, the output in construction remained almost flat in May 0.2% y/y, according to Alexander Isakov, chief economist at VTB Capital.
“Nonetheless, as we mentioned in our Output & Demand - April; demand remained subdued, as of 27 May, we see the tailwinds from construction-related production growth boosting output in the sector,” said Isakov.
The stagnation in real wage growth has been depressing the retail sector where turnover grew +1.4% y/y in May, up slightly from the +1.2% y/y in the previous month.
“The lacklustre growth reflects disposable income growth being down -2.3% y/y in
1Q19 (the last value available). This anaemic demand growth is likely to persist throughout the year, we believe, as long as the 2018
base effects are at play (higher inflation, no extra-public sector wage indexations etc.),” said Isakov.