Russian macro: a difficult year ahead
According to Rosstat’s publications, after having soared in December 2024, the Russian economy posted comparatively unimpressive results in January, as the output of the five basic sectors grew by 3.1% y-o-y. In December, it grew by 7.5%. This indicator is a monthly measure of combined activities in industry, agriculture, construction, transportation, and trade and it does not include some traditionally slow-growing segments of the economy, such as healthcare, education, and some other services. If so, this means that hypothetical monthly GDP should have increased in January at a much slower pace. Meanwhile, the too-fast y-o-y growth of the basic sector output in December also looks suspicious, which could mean that the December statistics may have included economic activity that remained uncaptured in the previous months (similar issues arose not only in 2024 but also in other years). This report is not aimed to analyze all of the statistical puzzles in detail as current uncertainty remains high—be it from the global economy, geopolitics, or Russia-specific peculiarities.
Despite some reservations related to the reliability of Rosstat statistics' showing a deceleration of economic growth in January, it looks as though it may have captured the general trend—at least on the consumer market, as this is supported by the CBR’s consumer credit data. In January, consumer lending shrank in nominal terms for a third month in a row, while its m-o-m growth decelerated previously. Amid these developments we decided to take a closer look at our 2025 growth outlook and downgraded GDP growth to 2.4%. We expect more pressure on Russian exporters, while imports will continue to grow as the ruble has already strengthened. Hence, net exports will contribute negatively to economic growth. We expect some GDP growth slowdown in 1Q25, but for the rest of the year, growth rates may stabilize amid disinflation, lower interest rates, and a reversal of the USD/RUB trend.
Any significant global or domestic shock can alter this view. Generally, we see the country’s key balances, such as the federal budget and the balance of payments, returning to the proportions (i.e., % of GDP) seen in 2023. Inflation will also slow to about its 2023 level, and the key rate may come down to the same level, as well.
Now read on...
Register to sample a report