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1Q13 GDP by expenditures

Yesterday, Rosstat released its first estimate of GDP growth in 1Q13 under an expenditure approach. The detailed breakdown reveals that in 1Q13, the growth in household consumption continued to accelerate gradually and reached 6.1%, slightly higher than the 5.8% YoY in 4Q12 and 5.6% YoY in 3Q12. Meanwhile, fixed capital investment almost completely stalled, with YoY expansion of just 0.1% (compared with 1.4% YoY in the previous quarter and 15.5% YoY in 1Q12). The growth in capital formation (fixed capital investment plus inventories) plunged into the negative area for the first time since 4Q09, showing a 12.2% YoY decline. Exports added only 0.4% YoY, while the growth in imports also softened visibly to 4.9% YoY (vs. 9.2% YoY a quarter ago).

Given Rosstat’s data, we estimate that during the first quarter the key drags on growth were contracting export volumes (due to the rather bleak global situation) and stalled investment activity (on the back of a sharp deceleration in fiscal spending growth). Meanwhile, growth was only supported by the more rapid expansion in consumption demand. We see consumption growth being much weaker in 2Q13, with growth closer to 4.0%. The key drags are slower lending activity and higher deposit activity, resulting in a higher savings ratio coming together with a gradual slowdown in the growth of real wages. At the same time, declining imports and a recovery in exports are likely to smooth the impact of weaker consumption on growth.

We expect to see full-year real GDP growth at 2.4% YoY in 2013 as growth is to pick up in 2H13 supported by the better harvest (stronger exports, lower imports, lower inflation), the end of the negative phase of the lending cycle and a better base effect (especially in investment activity).

Maxim Oreshkin, Daria Isakova
VTB Capital analyst

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