Economic growth in 2018 exceeds Bank of Russia's forecast

In 2018, physical GDP rose by 2.3% slightly beating the Bank of Russia’s expectations (1.5-2%) and that of the long-term potential of the economy. This is largely attributed to temporary factors, such as the completion of a number of large-scale infrastructure projects, notes the new issue of ’Economy: Facts, Assessments and Comments’, a Bank of Russia commentary.

However, agriculture’s contribution to economic growth turned out to be negative in 2018 vs previous periods. It was negatively affected by a lower grain harvest and slowing growth of livestock output (primarily poultry and eggs) caused mainly by the saturated domestic market and unfavourable epizootic developments in some regions.

Estimates suggest that annual GDP growth in the first quarter of 2019 will be 1-1.5% reaching 1.2-1.7% at the year end. Business activity indicators in January were overall in line with the Bank of Russia’s expectations. Industrial production held at the level registered a month ago. The January rise in investment demand was mainly covered by imports. Annual growth in retail sales slowed down as expected due to, among other things, increased VAT.