Seasonally adjusted GDP in November decreased by 0.4% compared to October 2023

According to calculations based on statistical data available as of mid-January 2024, a significant correction in economic growth dynamics occurred in November 2023, as noted in a recent analytical note on short-term GDP dynamics by the Institute of Economic Forecasting (INP) RAS (see chart). Institute analysts believe that seasonally adjusted GDP in November decreased by 0.4% by October 2023. “The previous time a reduction in the estimated monthly GDP by a comparable amount was noted more than a year ago – in September 2022,” the authors note. At the end of December, the Ministry of Economy recorded a stop in GDP growth (plus 0.04%).

The contraction of the economy was ensured by a decline in agriculture and livestock farming and in the transport industry. Current statistics indicate a decrease in traffic volumes in December 2023. The volume of work in construction was growing, but “noteworthy is the decrease in the volume of concluded construction contracts and other orders,” which reduced the provision of construction companies with contracts and other orders from two months in December 2022 to 1.7 months in December 2023, they note authors of the note. The industry is stable, with no growth over the past six months amid increasing labor and capacity constraints. For two months in a row, there has been a decline in the seasonally adjusted index of real consumer spending. “This may indicate a decrease in the availability of durable goods for the least affluent segments of the population against the backdrop of tightening consumer lending conditions,” according to the Institute of Economic Forecasting of the Russian Academy of Sciences.

All this caused the institute to adjust its short-term forecast for GDP growth rates in the next few quarters by 0.4–0.5 percentage points downward – to 5.3% year-on-year in the fourth quarter of 2023 (instead of 5.8% in the previous version of the forecast ), plus 3.1% in the first quarter of 2024 (3.6%) and 0.9% in the second quarter of 2024 (instead of 1.3%). Based on the results of 2024, “the accumulated inertia of economic development over the past 1.5 years in the absence of new external shocks” allows the Institute of Economic Forecasting of the Russian Academy of Sciences to predict 1.6% economic growth, which is close to the current consensus and much lower than the IMF forecast, although this the result is higher than the average annual GDP growth rate for 2013–2022 of 0.9%.

Artem Chugunov