Russia Economic Report - December 2012
Real GDP rose by 2.9% on the year in Q3, broadly in line with our forecast of a soft landing for Russia’s economy. Details on the expenditure breakdown are not yet available but we expect consumer spending to have again acted as the main driver of growth, although retail sales data suggest a slightly diminished contribution compared with recent quarters. In contrast, non-oil exports continue to be held back by weak external demand, particularly from Europe.
Data available for Q4 paint a fairly mixed picture of economic activity. But overall the figures are broadly consistent with our forecast that growth will remain stable in Q4, implying full-year GDP growth of 3.4% for 2012, down from 4.4% in 2011.
Looking ahead, we expect the recovery to be gradual, with growth picking up momentum slowly during the course of 2013. Consumer spending will continue to be the main driver of growth, but its contribution will diminish as wage increases moderate and bank lending growth slows. But this will be largely offset by a pick-up in investment and an acceleration in inventory accumulation as the uncertainty over the future of the Eurozone is resolved.
We retain our 2013 GDP forecast of 3.4%. But the risks are skewed to the downside, particularly if conditions in the Eurozone deteriorate, which would trigger a fall in both investment and non-fuel exports.
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