Page 34 - RusRPTMar19

inflation returns to the single digits and household demand growth slows somewhat, year-end inflation (adjusted for the January VAT hike) should come in below last year's 4.3%; however, taking into account the VAT hike, which will add around 1 pp, we see the figure at 4.7%,” the Sberbank team said.
Fitch Ratings forecasts Russia's economic growth to slow to 1.5% in 2019 and then to modestly accelerate to 1.9% in 2020. "Fitch expects growth to slow to 1.5% in 2019 reflecting the impact of the VAT rate increase on consumption and weaker investment (especially given a higher base effect from 2018). We then expect growth to accelerate modestly to 1.9% in 2020, below the expected 3.2% for the 'BBB' median, supported by recovering private consumption and faster execution of government priority programmes," Fitch said in the report. "Average inflation will increase from the historical low of 2.9% in 2018, to 5.3% in 2019 due to a higher VAT rate, the 2018 ruble depreciation and higher inflation expectations," the credit rating agency added. "Nevertheless, Fitch forecasts inflation to return to the central bank target of 4% by 2020 in the absence of persistent effects from the VAT increase, negative supply shocks and further weakening of the ruble," Fitch noted.
4.0 Real Economy
Russia - Main Macro 2012 2013 2014 2015 2016 2017 Mar-2018 Indicators
Annual GDP (y/y, %)
3.41 1.34 0.64 -3.7 -0.5 1.5 1.5
GDP (per capita) (USD)
14,079 15,531 13,873 9,055 8,759 10,743 /
GDP: Private consumption expenditure (USD mn)
1,116,950 1,214,990 1,111,244 720,256 680,455 826,389 207,035
GDP: Public consumption expenditure (USD mn)
391,097 425,831 375,081 244,282 236,063 283,696 79,723
GDP: Gross fixed capital formation (USD mn)
471,337 496,982 428,573 276,240 280,350 342,294 58,303
GDP: Exports (USD mn)
524,697 527,266 497,834 343,543 285,772 357,816 102,956
GDP: Imports (USD mn)
Source: CEIC
4.1 Industrial production
317,177 314,967 286,669 182,719 182,347 227,502 54,820
Russia’s manufacturing industry grew by 2.6% in 2018, Industry and Trade Minister Denis Manturov said during the working meeting with President Vladimir Putin on February 25. According to the minister, the fastest-growing sectors were railroad rolling stock manufacturing, first of all freight stock manufacturing, and construction highroad engineering, which soared by 23%. The total growth across sectors of industry ranged from 3% to 12%, he said, adding that chemical process industry and drug production traditionally gain 10% per year.
34 RUSSIA Country Report March 2019 www.intellinews.com