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Russia Output & Demand – March


Yesterday, Rosstat published its March statistics pack on economic conditions.

Unemployment slid to 5.4%. The seasonally adjusted unemployment rate dropped to 5.0%.

Real retail sales growth almost unchanged at 4.0%, mainly due to the non-food component, which posted a gain of 6.9%, the strongest since January 2013, offsetting the slowdown in food items (+0.7% YoY vs. 1.8% YoY a month ago).

Investment in fixed capital remained under water, but the pace of its decline slightly advanced to 4.3% YoY, despite sky-rocketing residential housing completions (more than 25%).

Construction simultaneously intensified its drop to 3.1% YoY, after a 2.4% YoY decline in February.

Real wage growth significantly decelerated to 3.1% YoY, the second lowest mark since July 2011. 

Spring got underway with rising geopolitical tensions propagating into an uncertainty shock for economic agents. The first damage assessment from Rosstat for March reveals mixed, albeit expected, dynamics. Companies predictably reacted by holding off capex, while households sped up purchases of imported goods and rushed to the safety of the dollar and real estate. Looking ahead, investments are likely to remain under pressure, while consumer resilience is unlikely to sustain in an environment of slower income growth. We do not think the report constitutes a surprise for the CBR, making it comfortable with its current wait-and-see stance.
Vladimir Kolychev, Daria Isakova
VTB Capital analyst


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