Russian GDP still growing at pace of H2 2022, depth of consumer demand slump may have been overestimated - CBR analysts

MOSCOW. April 19 (Interfax) - The Russian economy, judging by the latest data, is continuing to grow at the same rate that was achieved in the second half of 2022 and made it possible to avoid a steep drop in GDP for the year after the disastrous second quarter, the Central Bank's research and forecasting department said in a bulletin on current trends.

"Statistical indicators confirmed that there was strong growth of economic activity in February. Judging by the latest and survey indicators, it continued in March. Consumer demand grew, fueled by an increase in earned income," the report said.

The strong expansion of business activity, judging by the latest statistics, continued throughout the first quarter and GDP growth at the beginning of 2023 "might turn out to be comparable to the rates of the second half of 2022," the Central Bank analysts said. The main contribution to the growth of activity was made by domestic demand, while the contribution of exports remained limited, they said.

Output by consumer industries remained stable, and the gradual expansion of consumer demand amid rising incomes and falling unemployment might already push the sector into growth in the coming quarters, the report said.

"At the same time, imports will continue to recover thanks to the increase in supplies of consumer goods from friendly countries. Furthermore, we have reason to believe that the significant change in the structure of supply of consumer goods due to the switch to foreign suppliers from friendly countries or Russian manufacturers that began last year could have led to an overestimation of the depth of the drop in consumer demand and underestimation of the speed of its recovery," the Central Bank analysts said.