3Q20 y-o-y GDP upgraded

RUSSIA ECONOMICS - In Brief 12 Dec 2020 by Alexander Kudrin

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Rosstat upgraded its estimate of the 3Q20 y-o-y GDP growth, which of course remained negative, but less so (-3.4% versus -3.6% released earlier as a flash estimate). This upgrade was generally in line with GKEM Analytica’s thinking and previous upward revisions Rosstat. As a result, the 9M20 GDP contracted y-o-y by the same 3.4%. This revision didn’t alter GKEM Analytica’s 2020 forecast, which assumes around 3.3-3.4% contraction, as some monetary indicators suggested that in November and early December, Russia’s economic situation didn’t deteriorate despite rising infection cases. The composition of GDP growth by sectors didn’t change in 3Q. The financial sector was the fastest-growing sector (up by 8.0%) that points to the same problems indicated in the previous GKEM Analytica reports, such as an excessively comfortable for this sector macroeconomic policy and regulatory framework. This policy mix enabled the financial sector to benefit massively since 2011 – to some extent at the expense of other sectors. Manufacturing was flat, while mining was down by 12.3% y-o-y in 3Q20. Construction was slightly down, while agriculture and government administration grew by 1.7% and 1.8%. Most services, apart from the healthcare sector, were down, but a negative contribution of the mining sector to overall GDP contraction was the most significant factor.Meanwhile, Rosstat also released October demographic statistics, and for the first time, the impact of the pandemic on Russia’s demographic was explained with some detail, albeit for October only. The total death toll appeared higher than was initially published by the Rospotrebnadzor (an agency in charge of releasing daily flash e...