The Ministry of Economy estimated the growth of Russia’s GDP in the first half of the year at 1.4%
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The Ministry of Economy estimated the GDP growth of the Russian Federation in the first half of the year at the level of 1.4% (in annual terms), which is 0.5 percentage points higher than was recorded according to the results of the same, still “pre-crisis” period of 2021. In the second quarter of 2023, the annual growth rate was 4.6% after declining by 1.8% in the first. Such a jump is statistical in nature and is the result of a crisis failure in the second quarter of 2022. The intra-annual dynamics of the economy in the second quarter of 2023 worsened – after a noticeable increase, seasonally adjusted in the first quarter and month to month in April-May, in June, GDP stagnated in these measurements (plus 0.04% in June, seasonally adjusted – according to the Ministry of Economy ).
Rosstat data on the output of basic sectors of the economy in the second quarter (one of the so-called proxies to GDP, see chart) allowed analysts from the Solid Numbers Telegram channel to estimate annual economic growth in April-June at 6% (plus 1.3% for quarter, seasonally adjusted), which is significantly higher than the estimates of the Ministry of Economy. However, despite the fact that many analysts consider the output of basic industries to be the best proxy for GDP, their relative dynamics diverge noticeably for methodological reasons.
Another proxy for GDP, the S&P Global Russia Composite PMI Output Index (industry and services), indicated in July that the growth rate of economic activity was fading to the lowest levels since February, amid weakening demand for exports and the first signs of a negative impact of the weakening ruble exchange rate on costs and prices. The weakening of business activity in July was also evidenced by other leading indicators (except for the Rosstat index).
After the impact of sanctions on the Russian economy was mitigated for a long time by the accelerated growth of the military-industrial complex and significant government spending, now, according to CMASF economists, these incentives for GDP growth have actually exhausted themselves. New sustainable incentives have not appeared. Factors such as consumer consumption and private capital investment, which the Central Bank and the Ministry of Economy expected to grow rapidly in the second half of 2023, may not be so significant against the backdrop of a weakening ruble, rising inflation and tightening conditions for private lending.
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