Page 7 - RusRPTSept23

1.0 Executive summary
The Russian economy has recovered from the downturn of spring 2022.
Russia’s gross domestic product (GDP) grew by 4.8% on the year in April-June, the central bank said late on August 1. In January–March, the economy contracted by 1.8%. The July–September GDP growth is expected at 3.6% and the October–December at 1.5%.
The latest forecasts point to recovery of GDP this year. The IMF’s forecast now sees GDP growth of 1.5% this year, while the Bank of Russia forecast expects growth in the range of 1.5−2.5%. The July forecast average published by Consensus Economics puts growth this year at around half a%.
After several consecutive months of recovery, growth in seasonally adjusted industrial output yet stalled in June. The situation was about the same in both mining & quarrying and manufacturing. Mining & quarrying output has increased slowly since the start of the year, while manufacturing output has grown considerably. Manufacturing output in May-June was up by about 8% from the same period two years ago.
The rise in manufacturing has been driven by those industrial branches that benefit from higher military spending such as metal products, electronics, electrical machinery & equipment, and manufacture of vehicles other than automobiles. During the first six months of this year almost three quarters of the over 6% y/y growth in manufacturing came from these four branches.
Growth in construction activity plateaued in June, but construction was still up 10% y/y thanks to steady growth for over a year. The on-year volume of goods transport fell due to decreased pipeline transmission of oil & gas. Rail transport increased only slightly. In contrast, growth in road transport remained rapid as in 2022. Passenger ridership on public transport, which already grew last year, was up further this year for both bus and especially rail transport.
The recovery in private consumption from the spring 2022 slump has continued. In the second quarter of this year, household spending on purchases of goods and services, as well as retail sales, were up 9−10% y/y in real terms from last year’s downturn and roughly at the same level as in spring 2021. Real household incomes continued to rise and were up a few% from two years earlier. The rise in real wages accelerated.
Russia’s economy is likely to have had a very strong second quarter as industrial production and retail sales rose sharply in the second quarter (both by more than 3.0% q/q). But the activity data for June suggest that a lot of the momentum in industry started to fade towards the end of the quarter and Capital Economics thinks that growth is likely to slow sharply in the second half
RUSSIA Country Report September 2023 www.intellinews.com