Russia Early Indicators - November
The PMI indices showed that economic activity expanded at a slightly slower rate in November, mainly on the back of slackening internal demand. They therefore corroborate our view that growth has reached low levels and that the expansion in GDP might have slid to 2.4% YoY in 4Q12 (the lowest level since the contraction in 2009) mainly as a result of the base effect. However, softer inflation pressures coupled with a strong level of sentiment will likely support growth in the near term. In addition, November this year was warmer than in 2011, which in turn implies additional downward pressure on IP growth. Declining inflation combined with a weak growth outlook are likely to shift the CBR’s concerns from inflation to growth.
Maxim Oreshkin Daria Isakova
VTB Capital analyst
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