Decent economic performance in February, inflation low in March

RUSSIA ECONOMICS - In Brief 30 Mar 2023 by Alexander Kudrin

---

Rosstat reported that the output of the five basic sectors was down y-o-y by 2.2% in 2M22 and 1.8% in February. The industry was down by 2.0% and 1.7% for the same periods (also y-o-y). Note that February 2023 had fewer working days than February 2022. Hence, seasonally adjusted (by Rosstat) industrial output increased by 0.5% m-o-m. Construction grew y-o-y by 11.9% y-o-y and 10.9% (same periods). Generally, private consumption and investment activity will remain in the positive territory. We plan to publish an updated forecast and provide more color on this issue tomorrow or Monday.February was the last month this year when economic indicators were strongly affected by the high base effect. From March, y-o-y growth in more sectors will start turning positive - apart from mining and a few others. Meanwhile, retail sales y-o-y growth will become highly positive from April and remain so by year-end. Meanwhile, inflation in the seven days ending on March 27 was 0.05% w-o-w and 0.17% MTD (1.47% YTD). Inflation slowed fast. By the end of March, the y-o-y inflation will fall to 3.3%. In April, it may temporarily come down close to 2.0% y-o-y, which will be a good signal for the CBR to rethink its policy. Evgeny Gavrilenkov Alexander Kudrin