Page 36 - RusRPTJun20

3.0​ ​Macro Economy 3.1 ​Macroeconomic overview
Russia's gross domestic product (GDP) fell by 12% year-on-year in April​, when the countrywide non-working period to contain the spread of Covid-19 was in place according to estimates released on May 31.
The steep decline eliminated the modest economic growth seen during the first three months of 2020, when the Russian economy expanded by 1.6% compared to the same period last year, according to the Ministry of Economic Development. Given the disappointing April results, the ministry now estimates that Russia's GDP shrank by 1.9% over the first four months of this year.
Russia introduced coronavirus-related restrictions in late March and has prolonged the measures several times since then in order to battle the spread of infection. The paid non-working period ended on May 12.
Sectors of the economy focused on consumer demand suffered most.
For example, consumer services fell by more than a third due to restrictions on leisure, culture and sporting activities, while retail sales dropped by a nearly a quarter. Although stores and food retailers remained open the whole time, their turnover also fell by 9.3%.
The second quarter could be the most painful for the Russian economy
according to an earlier forecast, as it is expected to shrink by more than 9%. The nation's annual GDP contraction is set to stand at 5%, while the country expects to return to pre-coronavirus levels no sooner than the first half of 2022.
After growing 1.6% y-o-y in the first quarter, the Russian economy contracted a staggering 28% y-o-y in April in nominal terms and 20% in real terms, ​according to the earlier preliminary estimates.
Analysts estimate that roughly two-thirds of this contraction stemmed from quarantine measures, while one-third stemmed from low oil prices, which averaged $18/barrel in April.
As Russia’s full-scale lockdown lingered through the first half of May, analysts predict Russia may experience a 16% GDP contraction in the second quarter. This is significantly greater than the 9.5% contraction projected by the economy ministry.
Russia’s economy ministry has proposed a three-stage plan for resuscitating the Russian economy by the end of 2021. According to economy minister Maxim Reshetnikov, the plan will be presented to the government in the coming days.
● Stage 1: Adaptation​. Through 3Q20, the government will aim to prevent the economic downturn from spreading to more industries and to stabilize the situation in the hardest hit sectors.
● Stage 2: Recovery​. From 4Q20 to 2Q21, the government will seek the recovery of economic activity and living standards across the
36​ RUSSIA Country Report​ June 2020 ​ ​www.intellinews.com