Page 41 - RusRPTOct22

Consumer-driven branches continued to perform poorly. The volume of retail sales in August was still down by 9% y/y. Although inflation has slowed in recent months, consumer prices still rose by 14% y/y in August. The rapid rise in prices has eroded consumer purchasing power, and the average real wage in July shrank by 3% y/y. The labour market situation remained stable. The number of persons employed in August was about the same as in August 2021, and the official unemployment rate remained at a historically low level of around 4%.
Industrial trends were weakest in branches most affected by sanctions or otherwise dependent on imports and foreign firms. For example, the EU ban on imports of Russian timber and wood products entered into force in July. The wood industry experienced a roughly 20% y/y drop in July and August. Passenger car production, which is highly dependent on imported components and international firms, remained in the doldrums in August with production down by 70% y/y.
Russia’s ministry of economic development estimates that Russian GDP contracted by 4% y/y in August and 1.5% in the first eight months of this year. The OECD forecast released this week sees Russian GDP contracting by 5.5% this year and 4.5% next year. The EBRD’s September forecast expects a drop of 5% this year and 3% next year.
According to Rosstat's detailed estimate, Russia's GDP fell by 4.1% year-on-year in the second quarter of the year. In the first quarter, annual growth was still 3.5%.
In the second quarter, the development of different production sectors was very uneven. The value added of the manufacturing industry decreased by 4% from the previous year, but the annual change in wholesale and retail trade was as much as −14.1%. The value added of the extractive industry shrank by 0.8%. On the other hand, construction grew by 3.4% and public services by 5%.
Seasonally adjusted GDP contracted for the second quarter in a row. The change from the previous quarter was −1.9%. In the first quarter, the change was −0.3%. After the corona pandemic, Russia's GDP reached its peak in the second quarter of 2021, i.e. economic growth was sluggish even before the start of the war. Russia's GDP shrank at the beginning of the year clearly faster than in 2014, when sanctions were imposed on Russia, e.g. Because of the illegal occupation of Crimea.
41 RUSSIA Country Report October 2022 www.intellinews.com