Page 69 - RusRPTAug22

up 0.2% in June compared with the same month a year ago.
While life in Russia goes on largely as normal as apart from the disappearance of leading international retail brands such as McDonalds, IKEA and the clothing and apparel vendors, the shops remain full and the bulk of Russian’s shopping basket is made up of domestically produced goods. Many of the more expensive items in the basket that were imported, like soaps, creams or high-quality processed foods, have already been replaced by domestic goods or imports from the likes of Turkey and China.
Uncertainties due to the war have also depressed demand as shoppers hold off on big ticket purchases until there is more clarity on where the war is going. Inflation has started to fall from its peak of 17.8% in April to 15.9% in June, but high prices are also depressing demand. (chart)
Retail trade turnover in Russia remains depressed at 9.6% below last year in June in real terms. Wholesale turnover in Russia also continues to fall by 18.3% in June below last year in real terms. (chart)
“Retail sales remained depressed in June. The contraction in sales eased a touch from 10.1% y/y in May to 9.6% y/y in June. In seasonally-adjusted month-on-month terms we estimate that retail sales have stagnated over the past two months and remain 10% below their level in February. Consumers are clearly feeling the pinch from high prices – although inflation has eased since April, goods prices are 10% higher than they were in February and prices of electrical appliances are still 25% higher,” Capital Economics said.
“Overall, the latest data provide a clearer assessment of the hit to Russia’s economy in Q2. Industrial production declined by 2.8% q/q, with mining output falling almost 6% q/q. Retail sales plunged nearly 11% q/q. Our provisional assessment is that GDP contracted by 9% q/q last quarter. Activity is likely to remain weak in the second half of this year and we have pencilled in another fall in GDP in Q3 as sanctions continue to take their toll across the economy. Our forecast is for a 7% contraction in GDP this year,” Capital Economics concluded.
69 RUSSIA Country Report October 2020 www.intellinews.com