Russia’s economic growth is facing a gradual deceleration, evident from the latest data. While the slowdown was initially observed in June, it persisted through July, indicating a shift in the country’s economic trajectory. Here’s a breakdown of the key points highlighting the current state of the Russian economy:
- The Russian economic development ministry’s preliminary estimate revealed that the year-on-year GDP growth rate decreased to approximately 3% in both June and July, down from the 4.5% recorded in the preceding April-May period. This notable decline underscores a significant slowdown in economic expansion.
- The general indicator encompassing Russia’s five core production sectors suggested a contraction in the volume of seasonally-adjusted economic output in June. However, this downward trend halted in July, indicating a stabilization in economic performance.
- Despite this stabilization, the volume of seasonally-adjusted industrial output continued to decline in July. The industrial sector, encompassing extractive industries and manufacturing, witnessed a sustained decrease in output over recent months.
- Furthermore, the construction and retail sectors also reported stagnant growth, with no signs of recovery in July. On a positive note, agricultural output experienced a notable increase of 5% year-on-year in July, providing some support to the overall economic output.
Looking ahead, major institutional forecasters have projected a modest growth trajectory for the Russian economy. Most forecasts, released in July or August, anticipate GDP growth in the range of 3-3.5% this year and around 1.5% next year. The Central Bank of Russia’s latest forecast aligns with these projections, estimating GDP growth at 3.5-4% this year and 0.5-1.5% next year.
As the economic landscape evolves, the Central Bank of Russia has responded to the changing conditions by increasing the policy rate from 18% to 19%. This adjustment reflects the central bank’s proactive approach in managing the economic environment amidst the shifting growth dynamics.
Additionally, trading economics data indicates an expected inflation rate of 12.9%, potentially resulting in real interest rates of 6%. While the methodology behind this calculation remains ambiguous, it underscores the challenges posed by inflationary pressures on the economy.
In conclusion, the current economic scenario in Russia reflects a period of adjustment and realignment as the growth rate moderates. By closely monitoring key indicators and implementing responsive policies, the country aims to navigate through the evolving economic landscape and achieve sustainable growth in the long run.
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