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MinEconomy says GDP continued to slide and printed at 1.6 %

According to the Ministry for the Economy, real GDP growth in January decelerated further to 1.6% YoY, the lowest level since the crisis, from 2.4% YoY in December 2012 and 3.4% YoY in FY12.

Given MinEconomy's recent estimate of January GDP, combined with the unfavourable calendar effect in February (2012 was a leap year) we expect the growth of the economy to slide below 2% YoY in 1Q13.

During 1H13, growth is set to remain weak amid slowing lending activity, tighter fiscal policy and a cooling labour market.

However, in 2H13 we see a chance of Russia's GDP rebounding on monetary stimulus (we expect the first cut in key rates at the April monetary policy meeting and 75bp in total for FY13) and a mechanism of infrastructure bonds being launched (RUB 100bn from the National Wealth Fund and RUB 300bn of pension money are to be invested into infrastructure projects).

All in all, we see the FY13 figure at 2.6% YoY (under Brent at USD 110/bbl) or 2.2% YoY (under USD 95/bbl). 

Maxim Oreshkin, Daria Isakova
VTB Capital analyst

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