Cbank says Russia’s GDP to grow 0.6% in Jan–Mar, 0.8% in Apr–Jun

MOSCOW, Mar 6 (PRIME) -- Russia’s gross domestic product (GDP) is expected to grow by 0.6% in January–March and 0.8% in April–June excluding seasonality, the central bank’s forecasting department said in a research note on Monday revising its previous estimations of a 0.4% and 0.5–0.6% growth, respectively.

The estimate for the second quarter is based on a Urals oil price of about U.S. $50 per barrel in the period, while the previous forecast was based on an oil price of $48.

Previously, the department said Russia’s GDP grew 0.35% on the quarter in October–December 2016 excluding seasonal factors. Thus, the revised estimates of the department show that the economy was in a recession from July–September 2014 through January–March 2016.

The department also said that Russia’s inflation started to slow down faster than expected thanks to favorable external economic and financial conditions and a moderately tough monetary policy of the regulator. The economic activity maintained positive dynamics, and the existing balance of risks favors a slow but gradual softening of the monetary policy, but it still has to remain moderately tough, the statement read.

The Federal State Statistics Service said that in the first 27 days of February prices went up only by 0.2%, significantly slower than the target trajectory, which improves chances for the authority to reach a 4% inflation target at the end of 2017. But households’ inflationary expectations are still high and growth of wages still outperforms the improvement of workforce productivity, creating new risks for hitting the inflation target, the department said.

The purchases of foreign currency at the local market by the Finance Ministry did not lead to a significant ruble’s weakening. “The exchange rate of the Russian ruble against the U.S. dollar rose 3.1% in February in spite of the fact that oil prices remained almost flat at the end of the month,” the department said.

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