Large revision in construction raises questions about data quality

RUSSIA ENERGY / FINANCE - In Brief 01 Feb 2019 by Marcel Salikhov
Last week Rosstat published main indicators for December 2018 which can be used to estimate last year results. On paper, it looks good. Industrial production increased 2.9% (+2.1% in 2017). Retail trade grew 2.6% (+1.3% in 2017). Real wages surged 6.8% last year (+2.9%). Based on the December data release from Rosstat, Ministry of Economic Development (MED) estimated that GDP growth was 2.0% last year which is higher than its previous own estimates (+1.8%). CBR published today its economic overview and pointed out that GDP growth in 2018 is expected to be ‘at the higher range of 1.5-2.0%’. Our GDP nowcast indicator estimates that 4Q18 GDP growth was +0.3% y-o-y. 2018 GDP growth is estimated by the model at +0.7%. Official GDP figures for 2018 are not yet published. To us one of the problems with the bright picture from official sources is a large revision in construction data which is the main reason for updated GDP results. Construction works were estimated to grow +0.5% for 11M18. But after the December 2018 release the estimate was changed to +5.3% based on revised data for 2017-18. In nominal terms the revision means that about $25 bln of construction was added for 2017-18. As housing data was not revised it means that revision is attributed solely to non-housing construction. Revisions to growh in construction in real terms, 2017-18Source: RosstatBut the magnitude of revision is huge without clear reasoning. After the public bewilderment Rosstat and MED provided some explanation the revision. The explanation basically is that it is connected to updated data from construction firms which often do not provide statistical forms to Rosstat in time. We do not find this...

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