Page 49 - RusRPTSept22
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Ministry of Economic Development. To remind, For 2Q22 overall GDP contracted by 4%.
As followed by bne IntelliNews, GDP forecasts for Russia hit by Western sanctions following the military invasion of Ukraine have been improved across the board. (chart) The International Monetary Fund (IMF) said Russia’s economy is doing better than expected, upgrading its forecast for the contraction anticipated this year to -6% from -8%.
Reportedly, the Ministry of Economic Development is preparing a revised macroeconomic forecast for 2022, upgrading the GDP decline expectations to 4.2% from the previously forecast 7.8% contraction.
In the meantime in July, main support to GDP came from extraction that increased by 0.9% y/y growth in July (versus 1.4% y/y in June), with construction growth accelerating to 6.6% y/y and agriculture posting 0.8% y/y growth.
“The more surprising news from yesterday’s macro statistics was that of fixed capital investments, which delivered 7.8% y/y growth in 1H22, implying 4.1% y/y growth in 2Q22,” BCS Global Markets commented on September 1. Notably, the labour market remained tight with the unemployment rate remaining within 4%.
Still, BCS GM warns that a number of industries continue to suffer from unfavourable external environments and high uncertainty domestically. Wholesale and retail trade posted 25.4% y/y and 8.8% y/y contraction in July, respectively.
“The recession evolves slower, but risks are high. In July, a number of macro indicators showed improvement in Russia’s economic landscape, however, its concentration in few sectors (one of which is mining) implies high instability and downside risks, especially related to deterioration in the energy sector,” BCS GM commented.
Russian GDP contracted by 4% y/y in the second quarter of 2022, according to Rosstat (chart), consistent with a fall of 6% in seasonally-adjusted q/q terms and in keeping with the growing consensus that the contraction of the economy his year is going to be much milder than previously anticipated.
“A much better performance than analysts had expected and than had seemed likely a few months ago,” said Liam Peach, an emerging market economist with Capital Economics. “There have been signs of stabilisation in many sectors over the past month or two but we don’t expect the downturn to bottom out until Q2 2023 and think the economy will stagnate at best thereafter.”
Russia’s Central Bank for the first time gave a forecast of a fall in
49 RUSSIA Country Report September 2022 www.intellinews.com