Page 7 - RusRPTAug24

1.0 Executive summary
Russia’s economy grew by 0.8% in the second quarter quarter-on-quarter, with overheating persisting so far, according to the Central Bank’s bulletin "What Trends Say".
"Due to active growth in May-June seasonally-adjusted GDP in the second quarter increased by 0.8% compared with the first quarter, according to our estimate. Such economic expansion coupled with an increase in price growth points at least to persisting economic overheating," the regulator’s analysts said.
But inflation remains the main problem fuelled by an overheating economy and jobless rate at a record low of 2.6%.
Russia faced its seventh straight month of price growth, in July as inflation touched on
9%, but is expected to peak at this level and fall to about 7% by the end of
the year.
CBR delivered a bumper 200bp hike to 18% on July 26, and leaves door open for further tightening. Analysts say there will be no cuts this year and there could be another 50bp hike in August.
The Russian economy continues to be in a state of overheating. The current price growth slowed down somewhat in June, but inflation pressure remains high, the Central Bank states.
The main pro-inflationary factor is high domestic demand, which continues to grow at a rate exceeding the current capabilities of the economy with high economic and credit activity, the Central Bank writes.
The growth outlook for this year was increased from 2.8% to 3.4-3.5% in July, only slightly less than 2023 rate of 3.6%. However, recent studies show that 15 percent to 45 percent of Russian emigrants have returned to Russia, and the process is expected to continue, prompting speculation that Russia is gradually reversing its brain drain following the 2022 migration crisis.
Current transformation of the Russian economy is a marathon race with barriers and not a short distance, Governor of the Bank of Russia Elvira Nabiullina said.
7 RUSSIA Country Report August 2024 www.intellinews.com