Non-oil GDP increased +0.2% y-o-y in 3Q; overall GDP is down 3.6%

RUSSIA ENERGY / FINANCE - In Brief 15 Nov 2020 by Marcel Salikhov

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According to Rosstat's preliminary data, Russian GDP decreased by only 3.6% y-o-y in 3Q20. It's a significant improvement over 2Q (-8% y-o-y) and means that the economy has almost managed to get back to "normal" in 3Q. There are yet no details on structure of GDP change from the production or consumption side. So it isn't easy to estimate the reasons for such a rapid improvement. Most analysts have noted that a surprise revision in industrial production data in September 2020 is the major cause of a much better GDP picture. Chart 1. Oil & gas GDP and non-oil &gas GDP growh in Russia, 1Q17-3Q20Source: Rosstat, FIEF estimatesWe think currently it's important to distinguish between the oil & gas part of the Russian economy and the rest of it. We estimate that non-oil GDP increased slightly by +0.2% y-o-y in 3Q while oil & gas GDP was down by 25% (-36% in 2Q). Oil production is hammered by OPEC+ deal restrictions while gas production is suppressed by low European demand. It's noteworthy that non-oil & gas part of the economy managed to show positive dynamics, even a small one. It's a sign of the economy's resilience and an indicator of a relatively effective anti-crisis fiscal policy. We also note that our GDP nowcast model predicted Rosstat's figure almost correctly with -3.9% estimate. To be objective, our nowcast model had a much more optimistic estimate for 2Q (-5.5% compared to -8% from Rosstat). Chart 2. GDP nowcast model estimates and official GDP change, 1Q13-4Q20Source: Rosstat, FIEF estimates Based on currently available data (which is very few for 4Q), our current nowcast estimate is -3.7%, close to 3Q. However, the second wave of COVID-19 pandemics and new rest...