+2.3% GDP growth in 2018 will not force CBR to hike in February

RUSSIA ENERGY / FINANCE - In Brief 07 Feb 2019 by Marcel Salikhov
After two previous hikes totaling 50 b.p. we expect CBR to stand still and keep the key rate unchanged on the February 8 meeting. Favorable global financial conditions and relatively high oil prices support decision to stay still. But there are some economic news for CBR to consider. First, Rosstat made news after official release of 2018 GDP figures. According to preliminary estimates, Russian GDP increased +2.3% last year. It’s a maximum growth rate since 2012 and is well higher than our and consensus estimates. The puzzling thing is that previously Rosstat estimated that GDP growth for 1-3Q18 as +1.6% y-o-y. It asically means that GDP should have grown +4.3% y-o-y in 4Q18 in order to get +2.3% annual figure. But there were no boom in 4Q18 according to monthly data from various sources. To be fair, in April Rosstat will definitely revise quarterly figures so that intra-year dynamics looks more smooth. But it is worrying sign of the quality and reliability of Russia’s economic data. We’ve wrote previously about unusual revision to the construction data for 2017-18. According to GDP production, valued added in construction increased +4.7% last year (-1.2% in 2017). It gave a contribution of 0.4 p.p. to GDP growth figures. Valued added in the mining increased 3.7% (+2.4% in 2017). From the demand side, the most positive contribution to GDP came from imports (+3.8% in 2018; +17.4% in 2017). At the same time, household demand and fixed capital formation experienced decline in growth rates. It’s not a sign of booming economy.Figure. Contribution to real GDP growth growth from production side Figure. Contribution to real GDP growth growth from demand side Table. GDP growh b...

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