Recession ending, recovery delayed
Industrial Production: Real wages:
Actual: 0.7%y/y, Previous: 0.5% Actual: -1.0% y/y Previous:-1.1% (revised)
Consensus forecast: 0.8% Consensus forecast: -1.9%
Barclays forecast: 0.9% Barclays forecast: -1.7%
Retail sales: Unemployment:
Actual: -6.1% y/y, Previous:-4.9 Actual: 5.6% Previous:5.9%
Consensus forecast: -4.8%% Consensus forecast: 5.8%
Barclays forecast: -4.7%
· Russia real sector data continued to indicate that the recession is drawing to a close, but without a real recovery taking hold. On the consumption side, the recovery seems to have stalled. Retail sales are continuing to decline (Figures 1 and 2). This is somewhat surprising given that the RUB has stabilised and that real wages have performed somewhat better. The rise in real wages reflects a deceleration in inflation more than large increases in nominal wages (Figure 3).
· On the production side, signs are positive with industrial production now in positive range for several months (Figures 4). In support of this, we also see labour markets remaining strong (Figure 5). Banking system credit to business has remained high throughout, while credit to consumers is just starting to stabilise (Figure 6).
· Even though oil prices have improved and the RUB has stabilised, retail sales imply that consumers are still feeling the strain. This probably reflects relatively tight monetary conditions and fiscal policy tightening. The outlook for the economy looks stable instead of improving. Oil prices remain less than half the mid-2014 level. Under these circumstances’ Russia’s growth prospects are at best mediocre.
