The Russian economy returned to a trajectory of decline

The Russian economy returned to a trajectory of decline


MOSCOW, December 28. Russian economy in November continued on a positive trend, taken in July-October of the current year, and returned to the region of negative values.

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Small monthly GDP growth with seasonality in July-October, fell in November by 0.3% compared to the previous month, according to the monthly monitoring of economic development for November. After positive dynamics in July-October fell industrial production (in November by 0.6%), increased the decline in agriculture (-0,9%), construction (-0.2 percent), retail trade (by 0.8%), paid services to the population (-0,7%).

In relation to the corresponding period last year the decline in GDP accelerated slightly in November – up 4% from 3.7% in October. In January-February GDP fell by 3.8%.

Earlier, the head of the Ministry of economic development Alexei Ulyukayev noted that the deterioration in the economy’s response to change in oil prices, that inflation is falling a little slower than expected, which means greater reduction of consumer demand.

Unreliable growth gave way to recession

In industrial production the MAYOR noted stagnation. The decline in industrial production as a whole, seasonality in November was 0.6% after positive dynamics during the previous four months.

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“The decline in industrial production, which we saw, shows how unreliable was the growth in the previous months, how fragile was the basis of this recovery,” said EDB chief economist Yaroslav Lissovolik. In his opinion, a painting is determined by the external background, especially, oil prices. The situation of November showed that there was no powerful internal drivers that could determine the restoration of economic growth, says the analyst.

According to the MAYOR, a decrease was noted in manufacturing by 0.5% after rising in September and October. For the first time since may, there was a decrease in the segment of extractive industries by 0.3%. For the period from January to November 2015 industrial production declined 3.3% to the corresponding period of 2014.

Lissovolik believes that the substitution makes some contribution to the macroeconomic indicators, but it is limited. “Partly in agriculture we are witnessing positive changes, but not enough to dramatically change the situation in the conditions of unfavorable external market conditions,” he said.

Demand reduction

According to chief economist of Alfa Bank Natalia Orlova, the problem in the economy is associated with a reduction in consumer demand.

In November continued its further fall, according to the monitoring. The reason for this MAYOR calls the reduction in real wages, rising prices and, as a consequence, the transition to a selectively-savings model current consumption. Retail trade turnover in November to the corresponding period of previous year decreased 13.1%.

“I bind what is happening, with a new round of sanctions now against Turkey. To replace winter Turkish food is quite difficult, so the main effect of sanctions short term, anyway, he materialized in the form of an inflation shock,” said Orlov.

What’s next?

 

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In December, the Russian economy will show a similar picture, especially in view of updating the ruble to historical lows amid further fall in oil prices, Lissovolik believes. In addition, the inflation was slightly worse than expected.

Orlov shares the concern about the situation in December. “Farmers quickly to replace the outgoing products (due to the Turkish sanctions – approx. ed.), the population from the inflationary shock of the Church. So I think, in December of this effect will to win “, she added.

However, she expects a small recovery in 2016 due to the stimulating fiscal policy before the elections and opportunities to build credit.