The economy continued to expand in October

RUSSIA ECONOMICS - In Brief 29 Nov 2023 by Evgeny Gavrilenkov

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Rosstat reported that the Russian economy continued to grow in October as the output of the five basic sectors grew y-o-y by 5.9% and 7.7% in 10M23 and October alone. However, as happened previously on many occasions, this growth appeared uneven across various segments. Agriculture grew by 1.9% and 5.5% over the same periods (y-o-y in both cases). The industry continued to expand as manufacturing was up y-o-y by 7.4% and 9.5% in 10M23 and October. In the mining segment, similar numbers looked less impressive as they were still in the negative territory (-1.1% and -0.1%). As a result of such a combination, seasonally adjusted industrial output moderately contracted in October (by 0.4% m-o-m). Production of an absolute majority of manufactured products continued to grow. Car production was up y-o-y by 8.1% and 58.4% (same periods), i.e., posted an acceleration of growth. In contrast, the construction activity decelerated as it increased by a mere 3.2% y-o-y in October, while in 10M23, it was up by 8.1%. As inflation remains high and household demand is overheated by rapidly expanding credit and generous budgetary spending, retail sales jumped by 12.7% y-o-y in October, which brought the 10M23 tally to 5.5% y-o-y growth. Wholesale trade grew by 25.5% y-o-y in October as base effects were extreme there. The 10M23 tally was up by 9.5% y-o-y. As the base effects gradually evaporate, the y-o-y growth numbers will be less volatile and more informative in the next few months. Overall, October statistics indicate the economy is heading toward over 3.0% growth. Continuously high and accelerating inflation supports this point of view. It now looks as though inflation in November c...