Page 7 - RusRPTApr24

1.0 Executive summary
Russia’s economic growth remained strong in March and even accelerated mildly. GDP growth in January amounted to 4.6% y/y (after +3.6% at the end of 2023), supported by manufacturing and wholesale trade.
The current seasonally adjusted industrial production growth rate in January was 0.7% m/m, while the manufacturing and services PMI indices remained above neutral in January-February. Meanwhile, the labour market remains tight, with the unemployment rate falling again to 2.9% in January.
Against this background, consumer activity is supported by the growth of real disposable income - at the end of 2023, it increased by 5.4% y/y, which allowed it to approach the 2014 level.
Russian industrial production growth also accelerated in February. According to Rosstat, industrial production growth accelerated in February to 8.5% y/y, after growing 4.6% in January, significantly exceeding analysts’ expectations and the market consensus forecast of 5.6%, lead by booming manufacturing.
Russia’s manufacturing PMI also surged in February to post 54.7, up from 52.4 in January, putting in its biggest gains in 13 years, S&P Global reported on March 1.
The BRICS countries have already surpassed the G7 in most macroeconomic indicators and this gap will widen further.
Despite the current strong growth, Russia’s economy is very vulnerable. Growth is expected to slow from 3.6% in 2023 to 1.8% according to the official forecasts, and to only 1% according to the International Financial Institutions (IFIs).
Russian President Vladimir Putin may reconsider his position on continuing the war against Ukraine if the West can squeeze Russian oil revenues, and US secondary sanctions imposed on shipping is starting to bite as India turns away Russian oil tankers in March. However, new routes that bypass these secondary sanctions will likely emerge and Russian oil revenues will be decreased due to the costs, but continue to flow in. SO far the net effect of the new sanctions that were first introduced in December has been for the oil price discount that Russia offers to rise from about $8 per barrel to about $14 a barrel as of the end of March. Still, despite the sanctions and restrictions, Russia had a positive trade balance of $51bn last year.
The budget figures from the first two months of the year came out that show
there was a deficit this January, but at RUB308bn ($3.3bn) it was nowhere
7 RUSSIA Country Report April 2024 www.intellinews.com