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Non-CIS imports accelerated slightly in January


The Russian Federal Customs reported that growth in non-CIS imports in January jumped to 14.5% YoY (but down to 0.5% MoM SA), from 4.4% YoY in 2012 on average, reaching an 11-month high. Growth in non-volatile components also improved, reaching the highest level since February 2012 of 12.9% YoY from 1.5% YoY in the previous month and 7.1% YoY in 2012; imports of investment goods added 13.8% YoY vs. 1.4% YoY in December. Importantly, car import growth slid into the negative area again, with a 0.4% YoY decline, after a 2.1% YoY increase in the last month of 2012. Furthermore, the annual increase in volatile items (planes, ships, sugar, vegetables and pharma) spiked to 37.0% YoY from the 3.0% YoY a month ago.

The recent reading implies only a benign upturn in import growth at the beginning of this year, as the strong total YoY number hides an exceptional surge in the volatile components (especially in imports of railroad engines and pharmaceuticals) and trend growth (MoM SA 3mMA annualised) in imports of nonvolatile items improved only modestly last month from almost 8% to 10.8%. Among the key growth drivers were investment goods (mainly machinery and electrical facilities as well as rubber), shoes and clothes. Hence, we might see a rebound in fixed capital investment data in January after a decline of 0.7% YoY in December. At the same time, the drop in the import of cars is worrying, and might imply that weakening activity in the Russian car sector is continuing.

However, while January’s report might be treated as positive, we do not see much support for imports in the near term (on the back of anticipated poor expansion of internal demand amid fiscal and lending constraints). Also, do not forget that stronger EURUSD is a factor supporting the USD-denominated indicator. Even though we see higher exports (to follow the strong oil price performance in December-January), recovered imports would likely impede the trade balance from expanding greatly in January.

Maxim Oreshkin, Daria Isakova
VTB Capital analyst

Russia, import

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