GDP y-o-y growth slows in 3Q24, dragged by agriculture and construction

RUSSIA ECONOMICS - In Brief 14 Nov 2024 by Evgeny Gavrilenkov

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Rosstat published its flash 3Q24 GDP growth flash estimate, and it appeared that economic growth slowed as it posted a mere 3.1% y-o-y as a preliminary figure. So far, Rosstat has not published any other 3Q24 GDP data, such as the nominal number or m-o-m growth (including seasonally adjusted). It appeared that economic growth markedly slowed, and the main impact came from agriculture. Previously, Rosstat reported that it was deeply down in August due to weather conditions and delayed harvesting. As a result, agriculture was down by 5.5% y-o-y last quarter. Construction also dragged economic growth as it was only slightly up – in 3Q24, it grew by 0.2%. It looks as though in 4Q24, agriculture will somehow show better results, while construction will remain sluggish, constrained by high interest rates and reduced demand for mortgages. The industry grew by 4.4% y-o-y in 3Q24 and, in seasonally adjusted terms, was flat m-o-m in September. As the mining sector keeps recalibrating its foreign trade relations and slightly down y-o-y in 3Q24 and 9M24, the manufacturing segment grew by 6.0% and 7.9% over the same periods. Domestic demand remains strong, fueled not only by government spending but also by rapidly rising wages. Meanwhile, Rosstat recently reported that in 2023, labor productivity grew by 1.9%, and it looks very likely that this year, it will be up again (roughly by about the same percentage). Rising wages keep pushing consumption up as retail sales grew by 6.0% y-o-y in 9M24, and various consumer-related services also expanded fast. However, poor performance in agriculture and construction negatively affected freight transportation, which grew in 3Q24 by 0.9% y-o-y...