Russia Economy in December 2015

The GDP flash estimate for 3Q15 pointed to a contraction of 4.1% y-o-y, following the decline of 4.6% and 1.9% in the previous two quarters, respectively. No disaggregate numbers are available yet.

The central bank kept its benchmark interest rate unchanged in November at 11.0%. The interest rate stood at 17.0% at the beginning of the year. The ruble depreciated 3.1% m-o-m in November, following a 5.5% appreciation in October. Inflation was somewhat stable, dropping to 15.6% y-o-y in October from 15.7% in the previous month, while the unemployment rate increased to 5.5% in October, up from 5.2% a month earlier.

Operating conditions in the manufacturing sector were little changed in November with the manufacturing PMI posting 50.1, marginally down from October’s 50.2. The survey revealed that incoming new business rose in November by the highest rate in a year. This improvement was due to the increase in orders from the domestic market, while new export orders declined by their sharpest pace in seven months. Production also increased at its fastest pace in one year with some firms linking this increase to higher activity in the agricultural sector. Employment, however, increased in November for the 29th month in a row on the back of falling backlogs. In line with the manufacturing PMI readings, industrial production in October 2015 was 3.6% lower compared with 2014, while retail sales also declined for the tenth month in a row, dropping 11.7% y-o-y in October from 10.4% a month earlier.

Russia’s GDP is expected to contract 3.2% in 2015 before posting a subdued rate of growth of 0.3% in 2016.