Page 53 - RusRPTApr21

by about 10% from the peak years of 2012−2014. In subsequent years, fixed investment was also significantly lower than in the first half of the 2010s. This is a major factor that has further diminished Russia’s long-term growth prospects slightly.
Russia’s fixed investment returned to growth in 4Q20. In 2020, Russia’s fixed investment fell by just 1.4% year-on-year, Rosstat reports on March 3. Rosstat’s revised data was significantly better than forecasted by the consensus (-5.7%) and the government (-6.6%).
Quarterly data shows that fixed investment returned to growth in 4Q20 (1.2% y/y) after recording a slide of 3.1% y/y in 9M20 (previous estimate was -4.1% y/y). Rosstat also upgraded its assessment of investment growth in 2019 from 1.7% y/y to 2.1%.
Construction, exporters and the state lead recovery in investment. In annualized terms, a few sectors of the Russian economy posted gains in investment volumes last year. The key sectors include construction, public management, refinery, metallurgy, financials, IT, timber, healthcare, food- processing and pharmaceuticals.
“Positive investment trends pave way for a faster economic recovery. In our view, three factors have made a faster recovery in investment possible: a spike in demand for housing helped by the continued boom in mortgage issuances, the rally on commodity markets that revived development programs of exporters, and the continued flow of public funding of a variety of projects in areas of road construction, IT, healthcare, defense, etc. All of these factors are still at play in 2021, which means that investment activity will remain an important driver behind a faster recovery of the economy. We forecast that volumes of fixed investment could rise by 4.2% y/y in 2021, while Russia’s GDP could expand by 3.3% year-on-year,” BCS Global Markets said in a note.
“The surprising shift to growth in investment in late 2020 was primarily the result of a resurgence in residential construction and public funding. We expect investment to remain a key growth driver in 2021 as well,” BCS GM added.
4.5 Labour and income
4.5.1 Labour market, unemployment dynamics
Unemployment continued to fall, reaching 5.7% SA in February vs. 5.9% SA in January and 6.1% SA in 4Q20. Credit activity was still high, with the loan portfolio adding 15.4% y/y from 13.6% y/y in January thanks to mortgages (+21.8% y/y).
53 RUSSIA Country Report April 2021 www.intellinews.com