​Economic growth remained strong in September and 3Q21, though the 4Q21 looks more challenging amid rising incidence rate

RUSSIA ECONOMICS - In Brief 02 Nov 2021 by Alexander Kudrin

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The Rosttat reported that real incomes in Russia grew y-o-y by 4.4% and 7.6% in 9M21 and 3Q21. In 3Q21 real incomes were higher than in 2Q21 by 4.5% (not seasonally adjusted). Similar numbers for real disposable incomes were 4.1%, 8.1%, and 4.6%. Both real incomes and real disposable incomes are heading towards over 4% growth in 2021 as a whole. As inflation accelerated in recent months and is expected to stay high, growth of real incomes will moderate in 4Q21. Overall, these numbers coincide with expectations of around 4.2% GDP growth this year.Accelerated inflation combined with base effects (such as a strong recovery of various sectors of the economy in 4Q20) will cause a moderation of economic growth (y-o-y) at the end of this year. Such a deceleration was already seen in the case of the output of five basic sectors (industry, agriculture, construction, trade, transport) which is a kind of a monthly proxy for GDP. In 9M21, this output was up by 6.3% y-o-y, in 3Q21 growth decelerated to 5.4%. In September, the figure was even lower – 4.4% y-o-y.The performance was not even across different sectors of the economy. For example, the construction activity reportedly decelerated sharply in September (to 0.1% y-o-y) compared to 6.0% and 5.0% y-o-y growth in 9M21 and 3Q21. Note that, unlike many other sectors, construction was not very much affected by the pandemic restrictions in 2Q20. Construction was up by 0.1% in 2020 as a whole.Retail sales were hit badly in 2Q20 and decreased by 3.2% in 2020 as a whole. In 9M21 they were up by 8.4% y-o-y. In 3Q21 y-o-y growth figure looked more moderate (5.3%), but in September y-o-y growth accelerated to 5.6%. This acceleration is l...