A decrease in exports was the main drag on Russia’s GDP growth in the second quarter of this year, as it deepened from -0.4% YoY in 1Q19 to -4.9% YoY in 2Q19, analysts comment after official data on the structure of Russia’s economy was published earlier this week.
The drop in exports was a result of lower global demand for metals, Russia’s OPEC+ commitments and the temporary halt in oil exports via the Druzhba (Friendship) pipeline. Deterioration of net exports caused by external or temporary factors (not fiscal or monetary policies), knocked off 1.7 percentage points from the 2Q19 GDP growth rate, ING said.
Rosstat previously estimated Russia’s GDP growth in the second quarter at 0.9% compared with the indicator for the same period last year.
According to The Moscow Times, the latest numbers show the Russian economy is “both growing and declining, depending on whether you look at domestic or global statistics.”
In other parameters, Russia’s consumption growth accelerated from 1.2% YoY in 1Q19 to 2.1% YoY in 2Q19, suggesting a recovery to the levels seen before the VAT hike from 18% to 20% that took place at the beginning of this year. This upturn is somewhat surprising given that the monthly retail trade data suggested a 0.3 percentage point deceleration amid the slowdown in the retail loan growth after the 24% YoY peak seen in April.
“This indicates that the deceleration of traditional retail trade was offset by outperformance in online trade, meaning bargain hunting by the lower-income groups. In the meantime, a likely pick-up in services growth may possibly reflect the development of car-sharing, taxi, food delivery, and other services in the large cities, leading to higher consumption from the higher-income households,” ING noted.
Fixed investments showed a small 1.0% YoY growth in 2Q19. In addition, the contribution of stock building-to-GDP growth increased from zero to 0.4 percentage points amid targeted support from the budget. The overall industrial output growth accelerated from 2.1% YoY in 1Q19 to 3.0% in 2Q19 mainly due to the manufacturing sector.