Page 31 - RusRPTMar19

3.0 Macro Economy 3.1 Macroeconomic overview
Russia puts in a moderate 0.7% growth in January from mediocre set of monthly macro results
Russia’s economy put in a modest 0.7% growth in January y/y, as expectations for this year remain subdued, despite a controversial upgrade to 2.3% growth by Rosstat for the whole of 2018.
Minister of Economy Maxim Oreshkin admitted that the 2.3% GDP growth result for 2018 – a six year high — reported by Rosstat in January was “not
sustainable” and “due to one-off factors.” The ministry is predicting a very unexciting 1.3% of growth for this year but hopes growth will accelerate to 3% in 2020.
Russia could grow more quickly, but the attempts by the Kremlin to sanction- proof the economy have depressed incomes, investment and the austerity has depressed economic activity.
The January set of macro data painted a dull picture of meagre or modest gains as the economic growth fails to gather any momentum. After the shock of the 2018 growth result it seems Russia is back to the pedestrian gains of the last few years. Macroeconomic data for January was in line with analysts’ expectations.
Retail sales growth slowed to 1.6% y/y from 2.6% in 2018. This was tied in with nominal wage growth easing to 5.2% y/y in January from 7.3% in December, which was attributable to inflation climbing to 5% from 4.3% over the period.
“As a result, real wage growth sank to 0.2% from 2.9%. We expect real retail sales growth of 1.5-2.0% this year, which should correspond with consumption growth of around 1.5%,” Sberbank CIB said in a note.
Construction activity edged up 0.1% y/y in January, but the figure was substantially impacted by the high base effect, as growth reached 12.2% in January 2018.
“The y/y construction figure will be low in February as well, also due to the above-mentioned effect. We expect construction growth and investment activity to accelerate in y/y terms in 2H19, partly thanks to the implementation of the government's investment program,” Sberbank said.
On a promising note, freight transportation volumes expanded 2.4% y/y in January, including 2.3% growth in rail freight and 5.9% growth in the automobile transport segment, which Sberbank ascribes to a possible expansion in foreign trade.
“We reiterate our view that the economy will expand 1.5% this year -- down slightly from 2.3% growth in 2018. This will likely be driven by investment activity and foreign trade,” Sberbank concluded.
31 RUSSIA Country Report March 2019 www.intellinews.com