Economy contracts in April m-o-m, albeit unevenly by sectors and not as much as was expected earlier

RUSSIA ECONOMICS - In Brief 01 Jun 2022 by Alexander Kudrin

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Rosstat reported that Russian industrial output contracted in April by 1.6% y-o-y, while it was still up by 3.9% y-o-y in 4M22. The mining sector was down in April by 1.6% y-o-y as well, and it was up by 5.9% in 4M22. The same figures for manufacturing are minus 2.1% for April and plus 3.2% for 4M22. So far, contraction in the industry was not too deep, but it is still unclear when the bottom can be reached. Retail sales contracted in April by 9.7% y-o-y, and in 4M22, they were still up by 0.1% y-o-y. Food retail sales fell in April y-o-y by 1.3%, while non-food retail sales were down by 16.8%. In 4M22, food retail was up y-o-y by 2.2%, while the non-food contracted by 1.7%. The output of the five basic sectors was up by 3.0% in 4M22 and down by 2.6% in April (also y-o-y). Construction activity remained strong – up y-o-y by 7.9% and 5.6% in April and 4M22. Transportation output was negatively affected by the falling activity in the industry while agriculture continued to grow.Inflation in May decelerates fast as in seven days ending on May 27 it was at zero w-o-w. As a result, inflation MTD remained at 0.13%, implying that in May, inflation y-o-y will start falling.At a glance, April statistics indicate, that GDP contraction in 2022 as a whole, may not be as deep as was expected earlier. Next week one of the reports of this series will offer an updated 2022-2023 outlook. Evgeny Gavrilenkov Alexander Kudrin