23 Nov 2017 17:20

Analysts downgrade Russian economic growth outlook to 1.6% in 2017

MOSCOW. Nov 23 (Interfax) - The Russian economy will grow 1.6% in 2017 and in 2018, analysts from investment companies, banks and think-tanks said in a consensus forecast for Interfax.

Analysts from ING, Alfa-Bank , BCS, Vnesheconombank, VTB Capital, the Economic Policy Institute, Uralsib , Renaissance Capital, Sberbank CIB and Higher School of Economics National Research University's Development Center took part in the survey.

The survey was carried out on November 21-22, just after the Russian State Statistics Service (Rosstat) released data for October that the analysts described as weak, signaling that growth was slowing and the economic recovery was running out of steam.

A month previously, the analysts were looking forward to GDP growth of 1.7% in 2017, but the same 1.6% in 2018.

They said this time that they thought growth would continue to slow to 1.6% in Q4 2017, from 1.8% in Q3 and 2.5% in Q2. GDP rose 0.5% in Q1 2017.

The government is more optimistic - it thinks GDP will grow 2.1% in 2017 and 2018. But Economic Development Minister Maxim Oreshkin was already saying on Wednesday that growth for the year might now be around 2%, if not less. The Central Bank thinks GDP will grow 1.8% in 2017 and 1%-1.5% in 2018.

Individual analysts said GDP might grow anywhere between 1% and 2.3% in Q4. Three of them said just 1% growth was possible, four said 2.1%-2.3% and three said 1.2%-1.7%. Some of those predicting more than 2% said they would revise their forecast downwards, but that would take some time.

Individual forecasts for the year ranged from 1.3% to 1.9%, and for 2018 from 0.6% to 2.2%.

Rosstat said last week that industrial production growth came to an unexpected halt in October after analysts said 1% growth was possible. The last time there was zero industrial growth in the country was February 2017 when output declined 2.7%, but that was because of a leap year in 2016. When comparing 'normal' months, the last time Russia had no industrial growth was in January 2016. The halt in industrial production was especially surprising given that October 2017 had an extra working day compared to October 2016.

Rosstat said this week that GDP grew 1.6% year-on-year in January-September 2017 - less than the 1.8% growth forecast by the Economic Development Ministry. Russian GDP growth slowed to 1.8% in Q3 2017, from 2.5% in Q2, Rosstat said earlier this month in its preliminary estimate for the quarter. Again, Rosstat's figure was lower than that of the Econ Ministry, which estimated the economy grew 2.2% in Q3.

The 1.6% growth for the 9M renders the official 2.1% growth forecast for the year almost impossible - the economy would have to grow more than 3% in Q4 for that to happen.

Retail trade turnover in Russia rose 3% year-on-year in October 2017, Rosstat said this week. Retail trade growth slowed a little from 3.1% in September after accelerating in each of the previous two months. The October result was significantly lower than the consensus forecast from analysts, who told Interfax they thought the increase would equal 3.6%.

Capital investment in Russia rose 4.2% year-on-year in January-September 2017, Rosstat said. Rosstat did not publish figures for Q3 2017, but growth for the period may have slowed to around 4%: investment rose 2.3% in Q1 2017 and 6.3% in Q2 2017, and 4.8% for H1 2017.

Real disposable incomes fell 1.3% in October compared to the same month last year. They fell 0.3% year-on-year in both September and August and 1.3% year-on-year in January-October. The Economic Development Ministry in August raised its real income growth forecast for the year to 1.2% from 1.0%, but for that to come about, Rosstat would have to revise its figures for previous months. For now the signs are that real incomes will decline for the fourth straight year in 2017. They fell by 5.9% in 2016, 3.2% in 2015 and 0.7% in 2014.

Agricultural output fell 2.5% year-on-year after soaring 8.5% in September.