​Economic activity continues to rebound in January

RUSSIA ECONOMICS - In Brief 18 Feb 2021 by Alexander Kudrin

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Rosstat reported that retail sales were down by a mere 0.1% in January, while in 4Q20 and 2020 as a whole they were down by 2.8% and 4.1% y-o-y. Food retail sales were down in January by 1.0% y-o-y (by 3.9% and 2.6% in 4Q20 and 2020 as a whole). Non-food retail was up by 0.9% in January y-o-y (and down by 1.5% and 5.2% in 4Q20 and 2020). Note, that as inflation accelerated in 4Q20 it has negatively affected trends in real terms in retail sales, especially food retail, while non-food retail got an additional push from delayed purchases during the lockdown and reduced supply of paid services as some restrictions were introduced in 4Q20 wheb the second phase of pandemic hit the economy. Paid consumer services were down by 9.4% y-o-y in January, by 12.7% in 4Q20, and by 17.1% in 2020 as a whole.Construction was almost flat last month (up by 0.1% y-o-y), i.e., more or less the same as in 2020. Freight transportation was down by 2.0% y-o-y, which was better than in 4Q20 (down by 2.2%) and in 2020 as a while (down by 4.9%).All in all, these data confirm that economic recovery is gradually taking place. Private consumption is going to be strong this year, while government consumption is expected to be slightly down as nominal budget expenditures won’t grow this year (unless the budget is amended).On Monday GKEM Analytica plans to issue an updated macroeconomic forecast, even though at a glance it looks as though it won’t differ much from the previous version.Evgeny GavrilenkovAlexander Kudrin