Interfax: Russian GDP growth slows to 0.7% in Q3 from 0.8% in Q2 – Rosstat

MOSCOW. Nov 13 (Interfax) – Russian GDP increased by 0.7% year-on-year in Q3 2014, the Federal Statistics Service’s (Rosstat) preliminary estimate published on Thursday said.

Rosstat’s data coincided with the calculations of the Economic Development Ministry, which estimated GDP growth in Q3 at 0.7%.

Rosstat has not published estimates for GDP growth in January-September.

However, based on data for Q1 (growth of 0.9% compared to Q1 2013), for Q2 (growth of 0.8% compared to Q2 2013) and for Q3, Russian GDP growth for the 9M could be estimated at about 0.8%. The Economic Development Ministry also estimated growth in January-September at 0.8%.

Seasonally adjusted GDP growth in Q3, as in Q2, was nil. Seasonally adjusted GDP contracted 0.5% in Q1.

“The resumption of GDP growth in September largely offset the decline in economic activity in August and overall managed to avoid a contraction in seasonally adjusted GDP in the third quarter,” the Economic Development Ministry said in its economic monitoring report for January-September.

Seasonally adjusted GDP grew 0.4% in September after contracting 0.4% in August. “The September growth stems from reviving growth in output in industry and the agricultural sector. Retail trade and consumer services also remain positive, despite slowing growth in real individual incomes and real disposable incomes. But the trends remained negative in September, due to shrinking volume of investment in fixed capital and construction, and declining exports of oil and gas,” the ministry said.

The GDP growth trend improved each quarter on a year-on-year basis, from 0% in August to 1.1% in September. “The agricultural sector and industrial production made a major positive contribution,” it said.

However, the fairly high comparison basis in Q4 2013 (when GDP growth was 2.0% on an annual basis compared with 1.3% in Q3 2013) could result in a small contraction in Q4 2014.

Nonetheless, the Economic Development Ministry still expects GDP growth in full-year 2014 at the 0.5% level, and perhaps a little higher.

The consensus forecast of economists compiled by Interfax at the end of October is for GDP growth to total 0.3% in 2014 and 0.2% in 2015. The Econ Ministry believes the economy will expand 1.2% in 2015, according to its forecast from the beginning of September. The ministry will update that forecast at the beginning of December.

The Central Bank in its updated monetary policy published on Monday significantly downgraded its forecasts for Russian economic growth in 2015-2017 under the basic scenario, essentially acknowledging there will be zero GDP growth in the next two years.

The Central Bank has lowered its 2014 growth forecast to 0.3% from 0.4%. It now forecasts nil growth in 2015 (down from 0.9%-1.1% in the monetary policy published in September), 0.1% in 2016 (1.8%-2%) and 1.6% in 2017 (2.2%-2.5%).

“Based on the assumed external and internal conditions for development of the Russian economy, GDP growth will be close to zero in 2015-2016. In 2017, economic activity is forecast to pick up due to growth of import-substitution production and increased competitiveness of Russian exports,” the Central Bank