Rosstat has published its first estimate of GDP growth last year.
The headline GDP growth was a relatively resilient 0.6% YoY last year.
Growth continued to rebalance away from domestic demand in 2014, with its contribution declining from 2.4pp in 2013 to a mere 0.4pp last year, while that of net exports rose to 0.7pp, from 0.4pp in 2013. In the meantime, the pace of de-stocking in the economy has moderated visibly, shaving 'only' 0.6pp off the overall GDP growth last year (vs. 1.6pp in 2013).
On the supply side, manufacturing and the financial industry were the main positive drivers last year. Manufacturing benefited from restrictions- and RUB-driven import substitution, state-led military and infrastructure spending, as well as the 'flight from RUB'-related spike in housing sales. In the meantime, the robust expansion in corporate lending following the shutdown of the external credit markets and consequent pickup in demand for domestically-originated refinancing propped up the financial industry.
Looking ahead, we expect a significant decline in activity this year. Military spending and pipeline construction are likely to remain the bright spots in 2015, while a weaker currency could strengthen the rebalancing towards a greater contribution from net exports. This, however, is unlikely to offset the spillover from a sharp contraction in domestic demand following the plunge in oil prices and consequent negative impact from FX (the wealth effect) and interest rate (deleveraging) shocks.