Page 40 - RusRPTNov19

3.2 Macro outlook
The acceleration of economic growth in Russia last year to 2.3% was partly due to temporary factors, and growth was expected to slow down markedly this year. Rosstat's first estimate of growth in the first half of this year (0.7%) indicates that growth has slowed down even more than expected.
Recent quarterly growth data from Rosstat suggest that private consumption growth has continued at a moderate pace. On the other hand, the development of exports has been very weak. The very strong growth in exports since 2016 stabilized at the end of last year, and in early 2019 exports have contracted. Growth was expected to stabilize, but the decline in export volumes in many key sectors has come as a surprise. Part of the decline in export volumes is explained by a weaker grain harvest than last year, the crude oil production limitation agreement with OPEC countries and the disruption of the main oil export pipeline (Druzba pipeline) this spring. There is also a slowdown in the growth rate of the world economy and a bleaker outlook for growth ( World Economic Outlook ).
Investment growth is also modest, as fixed investment was lower in the first quarter than a year earlier. Public spending growth may slightly increase growth for the remainder of the year, but overall this year's growth will remain around 1%.
According to today's BOFIT Russia forecast , economic growth will pick up slightly next year, driven in particular by public consumption and public investment. However, the growth of the role of the state and the lack of market-supporting reforms limit the growth of private investment. While private consumption remains a major contributor to economic growth, non-existent growth in real household income and slowing borrowing will curb consumption growth in the coming years.
40 RUSSIA Country Report November 2019 www.intellinews.o