Economic growth gradually decelerates in August

RUSSIA ECONOMICS - In Brief 03 Oct 2024 by Evgeny Gavrilenkov

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Rosstat reported that in 8M24, the output of the five basic sectors (industry, agriculture, construction, transportation, and trade) was up by 5.2% y-o-y. In August alone, it increased by a mere 1.7%. This sharp deceleration was mainly caused by agriculture, as it was down y-o-y by 14.7% and 3.2% in August and 8M24. August and September are the most crucial months for grain harvesting, which was delayed this year due to unfavorable weather conditions in several regions. So far, the Agricultural Ministry expects a decent harvest in 2024 amid relatively high crop yields, and it looks as though harvesting was catching up in September. Construction grew y-o-y by a mere 2.8% in 8M24 and was almost flat in August – growth slows not least due to a moderation of household credit growth (mortgages in particular). At the same time, household consumption growth seemingly remains strong, albeit expectedly decelerates. In 8M24 and August, retail sales grew y-o-y by 8.0% and 5.1%. Services provided by restaurants and cafes grew 8.5% in 8M24 and 13.0% in August (y-o-y in both cases). Other paid services were up by 3.6% y-o-y in 8M24. Generally, we see no reason to change our 2024 GDP growth outlook (4.0%) as the economy is heading toward this number.