This week, the subdued growth of the economy is likely to remain in the spotlight. In our view, poor growth rates are only likely to recover when the CBR’s growth-friendly actions in March-April take effect on the real economy.
On the production side, the unfavourable calendar factor (last year December contained 21 working days while December 2011 had 22) implies slightly lower IP annual growth last month. However, there are some upside opportunities due to a recovery in the mining and electricity sectors (gas and electricity output showed much better results in December than in the previous month), in our view. Hence, for 2012 as a whole, we are unlikely to see IP growth above 3%.
As for local demand, the latest car sales data (0.6 YoY) and round of early indicators was disappointing. However, retail lending growth was strong (just a fraction below 40% YoY) in December. Hence, real retail sales might have edged down in December, flagging the still fragile medium-term trend. Preliminary customs data on imports implies that investment growth in December stayed sticky at weak levels. In addition, the unemployment rate likely rose to 5.6% a month ago, while the SA figure probably remained unchanged.
Among the other things to watch this week is the weekly CPI, which might indicate slower average daily growth pace than we have seen over previous weeks since we expect the second round effect of the hike in minimum vodka prices to decay.