VEB, unlike Econ Ministry, foresaw deepening of annual GDP decline in Oct
MOSCOW. Nov 24 (Interfax) - Russian GDP in October 2016 in annual terms accelerated its decline to 0.7% from 0.5% in September, economists at Vnesheconombank (VEB) said (at VEB, former Deputy Economic Development Ministry Andrei Klepach is responsible for GDP calculations).
On the other hand, The Economic Development Ministry expected the annual decline of Russian GDP in October to slow to 0.5% from 0.7% in September.
The estimates for GDP's decline in the 10M by the Economic Development Ministry and VEB are in line with one another - 0.7%. VEB said that the decline of GDP in 2016 will be within 0.6%, which also is in line with the forecast of the Economic Development Ministry.
"In October 2016, after the September reduction, a slight increase in economic activity was noted. In comparison with the previous month, the GDP index without seasonal factors rose by 0.1% against a drop of 0.2% in September 2016. Compared with the same period of last year, the decline of GDP accelerated from 0.5% in September to 0.7% in October of this year, VEB said in a statement.
The Economic Development Ministry gave its estimate of zero movement in GDP without seasonality in October.
VEB said that the calendar factor had a substantial impact on estimates for GDP in October. "This year, October, in comparison with September, was two working days shorter than is usually the norm between these months, and in comparison with October 2015, it was one working day shorter," the review said.
VEB said that construction (4.9% in comparison with September) had a great impact on GDP growth. Manufacturing (0.5%) and agricultural production (0.6%) also made a positive contribution to GDP. The following had a negative impact without account of seasonality: subsurface resource production (minus 0.1%), electricity, gas and water production (minus 0.3%), trade (minus 0.2%), transport (minus 1.5%) and net taxes (minus 1.0%), as a result of the slowdown in the rise of VAT and excisable products.
"Data for October in general turned out quite favorable. GDP demonstrated positive dynamics, continuing the trend of weak growth following Q3," VEB head economist Andrei Klepach was citing as saying.
"Along with the positive effect of the large harvest and the increase in agricultural productivity in the last few months, foreign trade has begun to taken on a greater role. In industry, export-focused enterprises are feeling confident, while imports are starting to rapidly win back positions and impede the recovery of sectors focused on import substitution," Klepach said.
"An uncharacteristic aspect of the current crisis is that retail sales so far have suffered more than investment demand. Investments fell from the peak in Q4 2013 to the lowest point in Q2 2016 by less than 13%, after which it began to rise. Retail trade fell from a peak at the end of 2014 to the bottom in Q2 2016 by 16% and also somewhat rose in Q3. In October 2016, the decline of trade and in general consumption, recovered. Retail sales fell by 0.6%, and services fell by 1.1%," he said about continued weak consumer demand.