Generally, imports into Russia remain on the weak side, with the growth pace stuck below the waterline. Last month, nevertheless, was characterised by a spike in volatile components, especially in ships (up almost 7 times vs. November 2012) and a rather stable decline in non-volatile imports at around 3% YoY and 1% in MoM SA terms.
Dividing between investment, car and consumption imports, we observed an uptick solely in consumption imports, while the other parts followed their long familiar downward paths. Looking deeper into the details, this does not contradict our underlying view that Russian consumers are set to temper their spending, as November’s acceleration in consumer imports growth was mainly due to food imports (particularly, fish and sea products (+44% YoY), frozen fish (2x YoY) and dairy (28% YoY)). A key exporter of fish to Russia, Norway, has hiked fish prices due to poor weather conditions; hence we might link faster food imports with a spike in fish prices rather than with an advance in fish import volumes (that remain stagnant amid the actively developing local fish market). Moreover, food imports were also spurred by domestic constraints in dairy production (stemming from the severe drought in 2010).
On balance, imports growth (with an adjustment on volatile components which blur the underlying picture) remains near zero (yet negative readings prevailed recently); and we do not see any drivers to improve it. On an encouraging note, contracting imports have likely helped to put the deteriorating trend in the current account on hold for now – a trend that we expect to continue into the next year.