Economic Development Ministry lowers retail sales growth forecasts to 2016
MOSCOW. Sept 25 (Interfax) - The Economic Development Ministry has reduced its forecasts for retail sales growth in Russia in the next few years.
The ministry now expects retail sales growth to slow to 4% in 2014 from 4.2% this year, but then accelerate to 4.4% in 2015 and 4.7% in 2016. The ministry previously projected growth of 4.3% this year, 4.9% in 2014, and 5% in 2015 and 2016.
In the first half of 2013, consumer demand was one of the main factors keeping the economy from slipping into a recession, offsetting the stagnation in industry and slump in business activity among contractors, the ministry said in a revised forecast for Russia's social and economic development in 2014 and the planning period of 2015-2016 that was published on Tuesday.
Retail sales continued to grow in January-July, though growth slowed to 3.8% from 7.4% a year earlier.
The slowdown in retail sales growth this year is attributed to households shifting to savings over consumption. Consumer spending amounted to 75.8% of all personal monetary incomes in January-July, with spending on goods amounting to 57.9%, down from respectively 76.5% and 58.6% a year earlier. The share of savings, meanwhile, grew to 9.2% from 8.4%.
Another reason for the slowdown is the decline in commercial banks' activity in retail lending. "The waning of the credit boom primarily affected retail sales, as consumers, faced with high interest rates, are forced to limit and reconsider their spending," the ministry said.
The ministry forecasts that retail food sales will grow 2.3% this year, 2.1% in 2014, 2.4% in 2015 and 2.6% in 2016. The growth of retail sales of non-food goods is expected to slow to 5.6% in 2014 from 5.8% in 2013, but then accelerate to 6.1% in 2015 and 6.4% in 2016.