Russia: GDP growth moderates in the third quarter
GDP growth moderated to 4.3% year-on-year in the third quarter, from 10.5% in the second quarter. The result came in line with the preliminary estimate and partly reflected wanning base effect that flattered Q2 reading. On a seasonally-adjusted quarter-on-quarter basis, economic activity dropped 0.8% in Q3, contrasting the previous quarter’s 3.2% growth. Q3’s reading marked the largest contraction since Q2 2020.
The slowdown came on the back of weaker domestic demand. Private consumption increased 10.3% in the third quarter, which was below the second quarter’s 28.1% expansion. Moreover, government spending recorded zero growth in Q3 (Q2: +1.0% yoy), while fixed investment growth moderated to 7.7% in the third quarter, from 12.8% logged in the previous quarter.
On the external front, exports of goods and services bounced back, growing 7.4% year-on-year in the third quarter (Q2: -2.7% yoy). Meanwhile, growth in imports of goods and services slowed to 18.8% in Q3 (Q2: +31.9% yoy).
Commenting on the GDP outlook for Q4 2021 and for 2022, Artem Zaigrin, chief economist at SOVA Capital, said:
“November GDP was up 5.2% yoy after 4.8% yoy in October vs. 4.3% YoY in 3Q21. […] The worsened epidemiological situation brought fewer drags to the economic performance than expected. We see more upside risks to the GDP being above our 4.5% yoy forecast this year. Going forward, the labor market constraints and persisting bottlenecks in the global supply chains might bring the economy to an overheated state and weaken the growth momentum. We expect GDP growth to slow to 2.7% yoy.”