Russia Economy in June 2015

The GDP contracted 1.9% y-o-y in 1Q15, better than most expectations. Though details about GDP components have not been released yet, data showed imports fell by approximately 39% y-o-y in the same period, which is likely the reason behind thebetter-than-expected figure.

Inflation decreased to 15.8% y-o-y in May, easing slightly from 16.4% in April. In May, the central bank reduced its benchmark interest rate to 12.5% from 14% in April. Industrial production contracted 4.5% y-o-y in April, registering the third consecutive deceleration. The drop in retail sales accelerated further in April, falling 9.8% y-o-y from an 8.7% dip in March. Retail sales were in contraction for four months in a row through April when they hit a record low reading. The unemployment rate in April posted its first modest easing in seven months, standing at 5.8% in April from 5.9% a month earlier.

The manufacturing sector showed a further slowdown in operating conditions last month. The manufacturing PMI remained below the neutral line of 50 with 47.6 in May after registering 48.9 in April. Output, new orders and employment all posted declines in May compared to April. The manufacturing survey also showed a drop in inflation rates. The GDP growth forecast for 2015 is slightly higher this month at -3% y-o-y on better-than-expected economic performance in the first three months.