Page 40 - RusRPTFeb19

3.0 Macro Economy 3.1 Macroeconomic overview
Sector output generally improved m/m in November, with the exception of industrial production and agriculture.
Construction (up 4.3%) posted particularly strong growth, which pushed the y/y figure into positive territory for 11m18 (up 0.5%). Given the looming rise in public spending in December, bankers think construction could expand by 1% in 2018.
Retail sales rose a notable 3% y/y in November, up from 2% y/y growth in October (and up 2.6% y/y in 11m18). Food retail sales climbed 1.6% y/y (versus a 0.4% y/y increase in October) despite rising inflation during the month (including higher food inflation). Non-food sales rose even faster, adding 4.3% y/y compared with 3.4% y/y growth in October. This could be due to rising household demand, as people may have been buying certain durable goods ahead of the VAT hike in January. However, this effect will evaporate soon.
Real disposable income shrank 2.9% y/y in November and was down 0.1% y/y in 11m18. In light of this, we expect retail sales to slow in 2019.
3.2 Macro outlook
The Economic Development Ministry estimates Russia’s GDP will rise in 2018 at 2%, Minister Maxim Oreshkin told Bloomberg TV on January 25. The ministry earlier estimated the GDP increase at 1.8%. The Ministry is also hoping to lift growth to 3% by 2021, but economists are pessimistic about this goal being reached.
The International Monetary Fund (IMF) has worsened its Russia’s 2010 gross domestic product (GDP) growth forecast by 0.2 percentage points and 0.1 percentage point in 2020 to 1.6% and 1.7%, respectively, the IMF said on January 21 in its World Economic Outlook. The outlook was worsened due to reduction in the fund’s mid-term forecast of global oil prices. The fund slashed an expected average annual oil price in 2019 by US $9.81 to $58.95 per barrel to and now expects the oil price to fall to $58.74 in 2020. The IMF also cut its expectations for the combined global GDP increase by the same 0.2 percentage points in 2019 and by 0.1 percentage point in 2020 to 3.5% and 3.6%, respectively.
40 RUSSIA Country Report February 2019 www.intellinews.com