Page 34 - RusRPTDec18

companies S7 Group air carrier and aerospace investor and Russian Holding Company submitted the smallest co-investment plans of RUB9bn and RUB30bn, respectively (for projects worth RUB106bn and RUB591bn, respectively).
Base sector data published by Rosstat statistics agency showed fixed capital investment acceleration to 5.5% year-on-year in the third quarter of 2018, putting January-September investment growth at 4.5% y/y.
The 3Q18 reading visibly accelerated from the 2.8% y/y investment growth in 2Q18, VTB Capital commented on November 21 that such investment growth is "surprising, given no visible improvement in construction and a reduction of investment goods imports."
The bank believes that if such investment acceleration occurred, it was likely supported by the domestic production of investment goods. "Thus, the only factor that could have supported fixed asset investment (FAI) in 3Q18, was the domestic production of machinery & equipment, which added as much as 11.1% y/y (vs. -1.9% y/y before)" VTB argued.
Additionally, VTB notes that this visible acceleration in FAI is at odds with the recently published flash estimate of GDP growth in 3Q18, which eased from 1.9% y/y to 1.3% y/y. "Given this, we cannot exclude there being revisions (either in investment growth or in GDP)," the bank concludes.
The Ministry of Economic Development also did not anticipate the investment growth, expecting 1.8-2.3% growth in the reporting quarter and even seasonally adjusted decline. Analysts surveyed by Vedomosti on the mysterious investment bump link it to possible spillovers from ramp-up in oil extraction.
34 RUSSIA Country Report December 2018 www.intellinews.com