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GDP growth slowed to 4.0% YoY in 1Q12


According to the Ministry for the Economy, real GDP added 4.0% YoY in 1Q12, decelerating from the official 4.8% YoY growth in 4Q11. Monthly GDP increased only 3.2% YoY in March (decreased 0.6% MoM seasonally adjusted), slowing from the strong 4.8% YoY growth in February, as previously estimated by MinEconomy. The Ministry estimates that in March, fixed capital investments decreased 1.1% MoM, seasonally adjusted, and expects them to rebound in 2Q12. 

The data, coupled with the MinEconomy’s recent downward revision of its official GDP forecast for 2012 (to 3.4% YoY, from 3.7% YoY), is in line with our year-end estimate (3.5% YoY). We see the reading as additional evidence for the necessity of structural reforms, as the Russian economy is operating at full capacity.

Meanwhile, the weak GDP reading for March alone was expected, given the sharp deceleration in IP and investment growth last month (to 2.0% YoY, from 6.5% YoY in February, and 4.9% YoY from above 15% YoY growth in 2mo12).   

Alexey Moiseev, Aleksandra Evtifyeva, Daria Isakova
VTB Capital analyst


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