RUB sell-off props up consumer spending, IP sustained strength
On Friday, Rosstat published its package of monthly statistics for October.
Our View: October saw both demand and output indicators somewhat stronger than
we expected. Sharp RUB depreciation likely affected the ordinary behaviour of
economic agents, with companies slashing capex further and households bringing
discretionary spending forward and shifting savings into dollars and real estate
assets. On the supply side, robust IP contrasted with a sharp decline in agriculture,
but overall the dichotomy of sluggish demand and relatively resilient output indicators
suggests that growth continued to rebalance towards net exports. Looking into 2015,
we expect net exports and state spending to cushion the impact from deep cutbacks
in consumption and private investment, but a mild recession looks hard to escape.
VTB Capital analyst
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