Russian GDP growth down to 0.55 in Q1

RUSSIA / FSU POLITICS - In Brief 20 May 2019 by Alex Teddy
Figures released on May 17 show Russia's economic growth reveals only 0.5% yoy growth in the first quarter of 2019. This is worse than the Ministry of Economic Development's anticipated 0.8%. By contrast Bloomberg said a survey of economists had predicted 1.2% growth.This is a dramatic slowdown from the last quarter of 2018 when growth was 2.7%: much better than forecast. The current slowdown is more worrying because sanctions are being eased. The economy should be performing better. People are worried about a recession. Incomes are 2.3% down on this time last year. The feel good factor has vanished. At least the government has a good budget surplus. It is going to need it! Moscow's fiscal conservatism is wise. The strict monetary policy is also because there might be more sanctions and oil prices might yet drop.Why is the economy underperforming? The government cites the value added tax increase introduced in January. This reduced domestic demand. Corporate and mortgage lending slowed down. This official explanation is not enough.The Central Bank will probably reduce interest rates in June in response to the worrying fall in GDP growth.

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