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Russia: Revised data confirms that economic downturn bottomed out in mid-2015

December 31, 2015

According to revised data released by the by the Federal Statistics Service (Rosstat) on 30 December, Russia’s GDP contracted 4.1% annually in Q3, which was a softer contraction compared to the 4.6% decrease registered in Q2. The result, which was also better than the 4.4% drop the markets had expected, provided further confidence to the view that the recession hit bottom in mid-2015.

A detailed breakdown of data showed that agriculture continued to grow in the third quarter (Q2: +2.1% year-on-year, Q3: +2.1% yoy) mainly due to the redirection of domestic demand toward domestically-produced goods. Mining and quarrying rebounded in the same in Q3 (Q2: -0.1% yoy, Q3: +0.8% yoy), while the manufacturing sector continued to contract in Q3, although at slower pace than in Q2 (Q2: -4.8% yoy, Q3: -4.3% yoy). Meanwhile, the services sector continued to perform poorly. Wholesale and retail as well as financial services contracted in Q3 for the third consecutive quarter. Meanwhile, the deterioration in hotels and transportation services in Q3 was less pronounced than in Q2.

A quarter-on-quarter comparison confirms the relative improvement of economic conditions in Q3. Russia’s GDP decreased a seasonally-adjusted 0.6% in Q3, which was more than half the 1.3% contraction registered in the previous period.

In its December monetary policy report the Central Bank stated that it expects the economy to have contracted at a rate of between 3.9% and 4.4% 2015. For 2016, the Bank sees that economic growth will depend on the dynamics of energy prices and the economy’s ability to adapt to external shocks. In its baseline scenario, the Bank expects the price for Urals oil to average USD 50 per barrel between 2016 and 2018. As a result, the Bank sees a more protracted recession. It expects the economy to contract at a rate of between 0.5% and 1.0% in 2016. For 2017, the bank expects the economy to grow at a rate of between 0.0% and 1.0%.

Following the worst economic collapse since the global financial crisis in 2015, a group of analysts surveyed by Met the why particular expect the Russian economy to continue contracting in 2016, although at a more moderate pace. Met the why particular Consensus Forecast panelists project Russia’s GDP to fall 0.1% in 2016, which is unchanged from last month’s forecast. Panelists expect the economy to expand 1.5% in 2017.


Author:, Senior Economist

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Russia GDP Q3 2015 1

Note: Year-on-year changes in GDP in %.
Source: Federal State Statistics Service (Rosstat) and Met the why particular Consensus Forecast.


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