Russian economy received new impulse at year's end, seasonally adjusted growth accelerated in Q4 - Central Bank
MOSCOW. Feb 4 (Interfax) - Russia's economy received a new impulse for growth at the end of 2024 due to budget expenditures, according to the bulletin Talking Trends prepared by the Central Bank of Russia's Research and Forecasting Department.
According to the department's assessment, seasonally adjusted economic growth in Q4 accelerated compared to the growth rate in Q3.
"At the end of the year, the Russian economy received a new impulse for growth, as indicated by statistical data, real-time indicators and surveys. Amid a slowdown in lending, the source of this impulse was budget expenditures, which increased more significantly than usual for this time of year. Consumer demand was also likely influenced by bonus payments, some of which were shifted from Q1 2025 to Q4 2024," the review said.
"Overall, seasonally smoothed GDP growth in Q4, according to our estimates, accelerated compared to Q3 (the current Q3 estimate is +0.4% quarter-on-quarter SA). This may have been partially driven by increased budget expenditures. In general, GDP growth for 2024 will be closer to the upper boundary of the Central Bank's October forecast of 3.5%-4.0%," Central Bank analysts said.
However, "Rosstat statistics and the dynamics of various real-time and survey indicators point to uneven economic activity in Q4. A slowdown at the beginning of the quarter was followed by an acceleration later on. For example, output in key industries increased 0.5% month-on-month SA in November after near-zero growth in October," the CBR said.
"Economic activity may have slowed again somewhat in December, although survey and real-time indicators showed mixed dynamics. On the one hand, incoming payments increased significantly across all major industries, and consumer demand remained strong. On the other hand, assessments of the current situation and economic expectations worsened, and optimism declined," it said.
"Going forward, the trend towards a return to slower but more sustainable economic growth observed in Q3 and early Q4 will resume," it said.
"Continued rapid economic growth amid resource constraints (production capacities, the labor force) is impossible. If demand stimulation continues under these conditions, high and accelerating inflation will become inevitable, leading the economy into recession. This means there is no real choice between continued rapid economic growth accompanied by high inflation on the one hand and economic slowdown with disinflation on the other. The benchmark for determining the appropriate level and pace of GDP growth is inflation. A sustainably low inflation rate near 4% will indicate where the potential GDP level is and at what pace it can grow within the new economic structure," it said.