Page 23 - RUSRptApr17

3.0 Macro Economy
3.1 Macroeconomic overview
The 4Q16 shows recovery in economic activity - GDP growth was 0.3% y/y in 4Q16 reflecting a substantial improvement of the consumption trend. The retail and wholesale trade volume, which was down 3-5% in 1-3Q16 in 4Q16, contracted by only 0.6% y/y, pointing a significant improvement in household consumption.
The GDP structure by consumption does not show exactly the same improvement in household’s behavior: while in 1-3Q16 the volume of household consumption was down by 5% y/y, in 4Q16 it has improved only to -3.2% y/y.
The improvement in consumption should lead to recovery in inventories , which was always the case in previous crisis. This time, however, inventories did not react; they declined substantially in 4Q16 and were down even for the full 2016.
Rosstat has revised down not only inventories but also investments : instead of 1.4% y/y decline initially reported for 2016 investments are down now by 1.8% y/y last year. All in all, Rosstat figures put under question the optimism with regards to the investment-driven growth; at the same time the combination of stronger consumption and weaker inventories raises question over the sustainability of the consumption recovery in 2017.
Russia’s informal or grey economy has grown to its largest extent in 11 years, employing 15.4mn people or 21.2% of all employed Russians as of end of 2016, RBC daily reported on April 18, citing data of the Rosstat statistics agency. Since 2011, the informal sector of the economy has been growing and added an estimated 4mn people, including 0.5mn people in 2016 alone, according to the estimates.
23 RUSSIA Country Report April 2017 www.intellinews.com