Economic growth gradually turns more negative in May amid uneven dynamics by sectors and different challenges they face

RUSSIA ECONOMICS - In Brief 30 Jun 2022 by Alexander Kudrin

Rosstat reported that the output of the five basic sectors was up by 1.7% y-o-y in 5M22 but down by 3.2% y-o-y in May alone. Industry and transport posted a quite moderate y-o-y decline in May (around 1.7%-1.8% each) while retail sales collapsed by 10.1% - mainly due to the falling activity in the non-food segment. Food retail sales remained relatively stable. As a result, retail sales were down by 2.1% y-o-y in 5M22, heading for a much deeper contraction in 2022 as a whole. Later in the year, the non-food segment may stabilize amid disinflation and falling interest rates, while in April and May, when consumer lending shrank as rates jumped, the non-food segment suffered. Consumer paid services continued to expand y-o-y in May, albeit the pace moderated. Still, in 5M22, these services were up by 5.3% y-o-y.

Agriculture and construction posted y-o-y growth both in May and 5M22 (2.1% and 2.3% in agriculture, and 3.6% and 5.1% in construction). Meanwhile, the m-o-m growth in construction looks to moderate quite fast.

The major problems are seen in the manufacturing sector as it contracted by 3.2% y-o-y in May (but still was up by 1.9% y-o-y in 5M22. Car manufacturing almost collapsed, and it will take months to re-establish production of less sophisticated vehicles. This cont...

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