GDP continued to slide and printed 2.3% YoY in October
According to MinEconomy, real GDP growth in October decreased further to 2.3% YoY from 2.7% YoY in September. In 10mo12, Russia’s economy added 3.7% YoY. Adjusting for seasonal and calendar factors, the MoM increase in GDP ticked down to 0.1% from 0.4% in the previous month.
Furthermore, MinEconomy suggests that Rosstat significantly revised data on investments growth in 3Q12. In addition, Vedomosti today says that investments grew 7.3% YoY in 3Q12, not 1.4% YoY, as was published previously.
Weakening in GDP growth in October can be partly explained by the unfavourable base effect (in 3Q11, real GDP growth jumped to 5.0% YoY from 3.4% in the previous quarter). The recent reading bodes well for our full-year forecast of 3.5% YoY and 2.4% YoY in 4Q12. Moreover, MinEconomy underpins our suggestions published in Output & Demand — October; weak report sweetened by data revision that October’s growth in fixed capital investments of 4.9% YoY should not be considered as an impressive improvement and the overall economic picture remains weak and is even worsening. This, coupled with cooling lending growth and tighter fiscal policy, points to bleak prospects for economic growth and therefore provides an additional argument for the CBR to bring the tightening cycle to an end and start easing in March-April next year.
Maxim Oreshkin, Daria Isakova
VTB Capital analyst
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