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MinEconomy says GDP at 1.7% YoY in 1H13


According to the Ministry for the Economy, real annual GDP growth advanced to 1.5% in June (adjusting for seasonal and calendar factors, the MoM change in GDP was 0% last month), from 1.0% in May, bringing the growth in 2Q13 to 1.9% YoY, from 1.6% over the first quarter. Thus, over 1H13, Russia's economy added 1.7% YoY.

Commenting on the key growth drivers, Deputy Minister for Economic Development Andrey Klepach mentioned household demand, while investments were lagging. He also said that the economy would likely rebound in 2H13 after the recent pause.

We believe that the moderate pick-up in June is not the start of a recovery but a technical increase in economic activity after an especially weak May. For the full 2Q13, we expect real growth to be slightly below 2% YoY, but better than in 1Q13, implying that the economy is bottoming out. Hence, we expect to see the official reading coming close to MinEconomy's estimate for GDP growth of 1.9% YoY in 2Q13 and 1.7% YoY in 1H13.

Later on in 3Q13, the favourable base effect and the good harvest are likely to underpin economic growth. Then, closer to the end of the year, the growth in the economy might be spurred by the effect of the monetary stimulus (an important date in this regard is 29 July, when the first 12M 312-P auction is to be launched), a turnaround in the lending cycle and the mechanism of infrastructure bonds being launched by the end of the summer.

All in all, we see the FY13 figure at 2.4% YoY (under Brent at USD 105/bbl).

Maxim Oreshkin, Daria Isakova
VTB Capital analyst

GDP, dollar

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