Russian GDP growth accelerates to 2.6% in April, economy grows 1.8% in 4M – Klepach

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(Interfax – MOSCOW, May 27, 2013) Russian GDP grew 2.6% year-on-year in April, compared with growth of 2% in March, the Economic Development Ministry estimates.

The economy grew 1.8% year-on-year in January-April, Deputy Economic Development Minister Andrei Klepach said at a briefing.

GDP grew 0.1% in April compared with March on a seasonally adjusted basis after rising 0.4% in March.

Klepach said that in connection with new data from the Federal State Statistics Service (Rosstat), which has estimated year-on-year growth at 1.6% in Q1 (the Econ Ministry’s estimate is 1.1%), the ministry had revised its seasonally adjusted estimate for the quarter from minus 0.1% to plus 0.2%. “But this is really still stagnation,” he said.

“There’s not been any major turnaround, and this applies to the base sectors above all,” Klepach said, commenting on the April figures.

He said monthly estimates for the first quarter had been adjusted a little. On a seasonally adjusted basis, GDP was originally estimated to have fallen 0.3% in January, but this is now estimated at 0.2%. February’s decline of 0.3% has been revised to zero growth. “This doesn’t make a radical difference,” he said.

Regarding industry, Klepach said the seasonally adjusted drop there was just 0.3%, or far less than the 0.9% that Rosstat had estimated, due to differences in how industrial data are adjusted for seasonal factors.

He said the extractive sector grew 1% in April and the manufacturing sector fell 0.9%.

There was zero seasonally adjusted growth in the electricity, gas and water utilities sector in April.

“In this respect there has been no major turning point in industry, indeed somewhat alarming tendencies persist,” Klepach said.

Manufacturing sector drops were seen in April in light industry, chemicals, metallurgy, construction materials and machine building.

Fixed capital investment fell 0.7% year-on-year in April or, on a seasonally adjusted basis, 1.7%. Klepach said the negative result here corresponded with that in construction, which fell 2.1% in April.

“Investment is so far our weak spot. When we used to talk about this we would talk about negative dynamics for state investment, a certain impact caused by negative dynamics at infrastructure monopolies, for example Gazprom (RTS: GAZP) and some others. But what is now taking place is possibly associated with the risk that private investment can no longer compensate this,” Klepach said, adding that investment data for a first quarter and half-year have “always been very provisional, and investment is always calculated for the winter.”

Consumer demand was positive in April, with retail trade up 0.2% compared with March. “This was slower than in March, but the dynamic is normal. Higher wages in real terms are behind this,” Klepach said.

“So, on the whole, we could say the pause in growth and the stagnation tendencies continue in industry and investment. Imports are still weak. We are expecting the turnaround we have talked about in the second half,” Klepach said.

Asked about the likelihood of recession in Russia in the autumn, Klepach said: “It is possible, but we are saying in all our analytical materials that this likelihood is small.”

“Generally speaking, there can only be a recession here if there is one in the world economy, not just the euro zone. There was stagnation in the euro zone in the first quarter, as we expected, and there looks like being in the second quarter also. But from then on most forecasts put the emphasis on revival. That revival might be delayed and that will naturally affect us, but not necessarily in the form of a recession,” he said.

“What is important for us and is a threat is that we are so far definitely in a situation of stagnation. So, all seasonally adjusted indicators are around zero. In industry they are minus, which is fairly alarming for us, both for the first quarter and in April. In industry we’ve had minus for practically two quarters taking the fourth quarter into account (industry fell on a seasonally adjusted basis in the fourth quarter). Industry is not working as it should for economic growth at a time when exports are falling and investment demand is weak. Hence the discussions of measures to stimulate economic growth,” Klepach said.

“The economy needs some doping,” he said.

Asked when the situation might after all turn around, Klepach said: “We expected in the past and expect now that this will be in the second half, in the third quarter,” he said.

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