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Economy rebounds in June

15 July 2020

Having reached in May the bottom of its downturn induced by the adverse consequences of the pandemic, the Russian economy is now bouncing back. Up-to-date figures confirm that the economic recovery accelerated in June and early July, according to the new issue of the macroeconomic bulletin Talking Trends prepared by the Bank of Russia’s Research and Forecasting Department.

Although economic activity stayed subdued in May and the first half of June, it has been demonstrating clear signs of revival over recent weeks. Domestic demand is the key driver of improving economic trends, while external demand is reviving much more slowly amid high uncertainty persisting in the global economy. However, a further recovery of the economy will be gradual and non-uniform. According to the authors of the bulletin, this will be associated with the impact of the secondary effects of the restrictions, demand decline coupled with long-term alterations in consumer behaviour, and the level of oil production and processing that remains decreased.

In June, annual inflation slightly sped up to 3.2% against 3.0% in May, which is explained by the low readings of the second half of 2019. Influenced by a range of demand- and supply-side factors, prices in various product and service groups were changing in a diverse manner. The authors of the bulletin believe that in the next few months the balance of risks is likely to remain shifted towards disinflationary pressure. Accommodative monetary policy will help stabilise inflation close to the Bank of Russia’s target over the medium-term horizon.

The views and recommendations expressed in the bulletin do not necessarily reflect the official position of the Bank of Russia.

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