Russian economic growth slowing in Q4 but still above balanced growth trajectory - CBR analysts

MOSCOW. Dec 6 (Interfax) - Russian economic growth has begun to slow in the fourth quarter, but it remains higher than the trajectory of balanced growth, the Central Bank of Russia's (CBR) research and forecasting department said in a bulletin on current trends.

"The latest data show a slowdown of Russian economic growth in the fourth quarter. However, businesses' optimistic expectations for the next year and a high level of consumer optimism have continued," the report said.

"The expansion of business activity slowed somewhat at the beginning of the fourth quarter, according to the Bank of Russia's surveys of businesses and payment system data. Nonetheless, the economy's deviation above the trajectory of balanced growth continues," the report said.

It also noted that a "qualitative difference of the current episode of key rate increases from the periods of 2014 and 2022 is households' high optimism regarding future incomes."

"The increase of the rate in 2014 and 2022 occurred against the backdrop of growing uncertainty in the economy, which was also reflected in a sharp deterioration of consumer sentiment and cooling of demand. At present, the economy is not facing a sharp change in external and internal conditions, while the situation on the labor market supports expectations of further income growth. This slows the reaction of demand to the tightening of monetary policy," the CBR analysts said.

"Therefore, the transition to a saving model of behaviour is slowing. An extended period of maintaining tight monetary conditions might be required for demand growth to correspond more to the potential for expanding supply," the report said.