Russian macro: economic trends unchanged, pointing to decent GDP growth in 2024
In the past seven days or so Rosstat, Minfin, and the CBR published their regular monthly statistics, allowing us a fresh look at the Russian economy in general. The main conclusion is that the trends that emerged earlier this year have not been broken, and most segments of the economy continued to grow steadily, albeit with one main exemption, namely, mining industries on aggregate. That being said, at a glance, the economy is seemingly heading toward a similar growth rate in 2024 as in 2023, or somewhat lower. Rosstat also published its 1Q24 GDP statistics by end-use and confirmed that GDP grew by 5.4% y-o-y. In seasonally adjusted terms, it grew by 1.0% Q-o-Q. It is worth mentioning that seasonally adjusted household consumption expanded by 1.4% Q-o-Q, while government consumption shrank by 0.2% Q-o-Q. The latter is not surprising as government spending is usually moderate at the beginning of the year. If quarterly Q-o-Q GDP growth of about 1% persists for the rest of the year, the economy can grow by over 4% this year.
Overall, the economic situation in the country looks decent as domestic demand expands steadily—particularly in practically all segments of the services sector. Domestic tourism, restaurants/catering, and passenger transportation are on the rise, and an upward trend looks solid in 2024. Passenger transportation grew y-o-y by 9.4% in 5M24 (passenger aviation, for instance, delivered 11.8% y-o-y growth during this period).
Among several notes we published in recent days, we mentioned that the balance of payments looks reasonably solid amid the increased Urals price of oil, which offsets lower exports in physical terms. Tax collection also looks stable, and the budget deficit will likely be well below the amended target—unless the government decides to further increase spending, which is yet to be seen (rising inflation may reduce the government's appetite for spending). Another potential tipping point may originate from the CBR’s key rate hike, which looks imminent in the current environment. We will follow these developments closely.
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