The slowdown in real growth last year was largely a result of the meagre growth in gross capital formation (mainly on the smaller change in business inventories, while gross fixed capital formation also added very modestly compared with 2011), while household consumption (which remains a core economic growth engine) and net exports improved. This coincides with the authorities’ decision to switch to investment-led growth, as household consumption is set to moderate given the strict fiscal policy, a relaxing labour market and the rebalancing of the banking system towards deposit growth.
As for the harvest effect, it turned out to be just a third of that in 2010, with the agriculture sector shaving just 0.2pp from FY12 GDP growth.
In 2013, we expect GDP growth to be the opposite of that in 2012. Growth is set to remain weak in 1H13, but we see a chance of it rebounding in 2H13 on monetary stimulus and the National Wealth Fund’s RUB 100bn being invested into infrastructure projects. In our view, the FY13 figure will be at 2.6% YoY (under USD 110/bbl) or 2.2% YoY (under Brent USD 95/bbl).
The recent data suggests that GDP growth decelerated in 4Q12 to 2.0-2.3% YoY, in line with the monthly data and slightly below our forecast. The key drag on growth in 4Q12 was likely the weak investment dynamics (in December, annual growth in fixed capital investments was negative) on the back of cooling corporate lending and tight liquidity conditions. At the same time, retail sales were supportive for GDP.