​Russia in Brief: Pandemic affected the economy in 1Q20, but not yet much

RUSSIA ECONOMICS - In Brief 27 Apr 2020 by Alexander Kudrin

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Rosstat reported that retail sales were strongly up in March (by 5.6% y-o-y) which lifted the 1Q20 y-o-y growth to 4.3%. Growth accelerated both in the food and non-food segments which in 1Q20 were up by 3.6% and 5.0% y-o-y. Clearly such an acceleration was largely driven by preemptive purchases of various goods and food products. An accelerating trend is expected to be broken in April. As mentioned in the previous reports, GKEM Analytica’s baseline scenario assumes that the lockdown in Russia won’t be lifted soon. Hence retail sales are expected to contract in 2020 as a whole. As the non-food segment is larger by size than the food retail, and as the former is expected to fall significantly already in April (and almost surely in May) the impact on the overall consumer market in 2Q20 will be very strong.Construction was not yet that affected in March and remained nearly flat y-o-y having posted 0.1% growth. In 1Q20 it grew by 1.1% y-o-y and similarly to the consumer market construction activity is set to contract this year. Output in the transportation sector was already down by 4.6% y-o-y in 1Q20 pointing to slowing economic activity.Agriculture grew by 3.0% y-o-y both in March and in 1Q20, and its performance looks stable so far.Rosstat preliminary estimated that real disposable income declined by 0.2% y-o-y in 1Q20. This decline is set to deepen in 2Q20. Rosstat no longer provides monthly statistics on nominal and real income, while wage statistics is published with some lag so that no detailed data on wage by sectors are available yet.Generally, the start of the year was not so bad in Russia, however, some signs of declining economic activity emerged already in Mar...