December's customs report on imports reflects a continuing moderation of import growth, which stabilised at low levels towards the end of last year. The deceleration in the annual growth of the headline reading can be explained by a slowdown in both the volatile and non-volatile items (though the latter was a greater drag in December).
In detail, it is positive that the MoM SA growth in non-volatile imports recovered strongly to 1.1% last month, reaching an 8-month high. This improvement was partly due to a bounce back in the import of cars. We treat this as a one-off move and not a reverse in the downwards underlying trend so far. From the trade balance perspective, slower imports implies a wider surplus in December and, as import growth is likely to be subdued over the coming months (on the back of anticipated poor expansion of internal demand amid fiscal and lending constraints), it would be supportive for the trade surplus and RUB in 1Q13.