Russia’s GDP decline slowed to 3.1% in February

The Russian economy contracted by 3.1% in February in annual terms after 3.2% in January and 4.2% in December last year, according to the materials of the Ministry of Economic Development. With the exception of the seasonal factor, GDP in February remained at the level of January.

“The economy continues to be supported by an increase in the volume of work in construction. In addition, a positive contribution is made by the growth of industrial production and transport freight turnover (with the exception of pipelines),” the Ministry of Economy’s report “On the Current Situation in the Russian Economy” says.

Growth in construction work accelerated to 11.9% yoy after 9.9% in January. On a monthly basis, excluding seasonal factors, the growth was 1.9%. Cargo turnover in February increased by 5.3% compared to February 2022. Freight turnover of railway transport increased the most – by 5.6% in annual terms.

The fall in industrial production in February slowed to -1.7% in annual terms after -2.4% in January. At the same time, industrial production increased by 0.2% over the month. The decline in the machine-building complex remained at the January level of -2.6% in annual terms. At the same time, the Ministry of Economy reminded that in December the annual decline was -15.4%. The cardinal improvement of the dynamics was ensured by the growth in the production of computer and electronic equipment, as well as the production of other vehicles.

Retail trade turnover fell by -7.8% yoy after -6.6% a month earlier. The Ministry of Economy explained this by rush demand in February 2022.

“The total turnover of retail trade, public catering and paid services to the population was -4.4% y / y below the level of last year after -3.6% y / y in January,” the ministry said in a statement.

On March 23, Prime Minister Mikhail Mishustin, speaking with a report on the work of the government in the State Duma, said that the decline in the Russian economy in 2022 was moderate, and now the economy has returned to a growth trajectory. The Prime Minister stressed that Russia “withstood” in the face of economic pressure, although it “was not easy.” Mishustin noted that “our economic system has shown such flexibility not for the first time.” He recalled how, during the pandemic, the Russian economy “passed through the crisis more confidently than many Western countries.”

According to the estimates of the Ministry of Economic Development, by the end of 2023, GDP will decrease by 0.8%, while in 2024 the Russian economy is expected to grow by 2.6%. In February, the Central Bank improved its GDP forecast for 2023 from a 1% decline to a 1% growth instead of a 1-4% decline according to the October forecast.

Earlier, the ACRA rating agency predicted a decline in Russia’s GDP in 2023 at the level of 1-1.5% instead of the previously forecasted 2.8%. According to the base case, Russia’s GDP growth in 2024 will be 0.8-1.8%, in 2025 – 0.4-1.6%.